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WorksheetsBreak-Even Point in a Business
Total questions: 42
Worksheet time: 1hrs 9mins
Break-even analysis helps to calculating and examining the margin of safety of a ________
company
organization
institution
business
direction
Does the total revenue have to be equals to the total cost?
Yes, it is.
Yes, it does.
No, it doesn't.
No, it can't.
Yes, they do.
Match the following statement:
Price Smarter
It proves that your plan is viable.
Mitigates risks by showing when to avoid a business idea.
It can be considered qhen you are thinking a new business idea.
It will affect your profitability.
This sets sales goals for your biusiness.
Match the following statement:
Catch Missing Expenses
It proves that your plan is viable.
Mitigates risks by showing when to avoid a business idea.
It can be considered qhen you are thinking a new business idea.
It will affect your profitability.
This sets sales goals for your biusiness.
Match the following statement:
Set Revenue Targets
It proves that your plan is viable.
Mitigates risks by showing when to avoid a business idea.
It can be considered qhen you are thinking a new business idea.
It will affect your profitability.
This sets sales goals for your biusiness.
Match the following statement:
Limit Financial Strain
It proves that your plan is viable.
Mitigates risks by showing when to avoid a business idea.
It can be considered qhen you are thinking a new business idea.
It will affect your profitability.
This sets sales goals for your biusiness.
Match the following statement:
Found your Business
It proves that your plan is viable.
Mitigates risks by showing when to avoid a business idea.
It can be considered qhen you are thinking a new business idea.
It will affect your profitability.
This sets sales goals for your biusiness.
Potencial investors in a business not only want to know the return to expect on their ______, but also the point when they realize this return.
incomes
taxes
investments
advantages
negotiations
Make smarter decisions help limit business decisions made on ______. How you feel is important, but it shouldn't be the base of your business decisions.
feelings
ideas
results
issues
emotions
What is the break-even point in business?
The point at which a company makes its first profit
The point at which total business costs and total business revenue are equal
The point at which a company decides to start up
The point at which a company sets its overall business goals
Why is the break-even point considered an important calculation and indicator of success?
It indicates the company's ability to generate sales quickly
It shows the company's potential for long-term sustainability
It represents the company's first real profit
It helps in setting a general target date for business goals
How does a start-up business find its break-even point?
By tracking sales and keeping accurate records of sales and costs
By generating their first real profits
By setting a general target date for business goals
By making a profit when it first opens
What is the balance between in a business that finds the break-even point between profit and loss?
Assets and liabilities
Supply and demand
Cost and revenue
Investments and returns
Who is the inventor behind the innovative Dyson vacuum cleaner?
Sir Richard Branson
Sir James Dyson
Sir Alan Sugar
Sir Jonathan Ive
What was the main reason Dyson's early vacuum cleaner prototypes did not require a bag to collect dust?
They used a high-efficiency particulate air (HEPA) filter.
They created a small cyclone by spinning air quickly.
They utilized a water filtration system.
They had a self-cleaning filter mechanism.
How many prototypes did it take before Dyson created a vacuum cleaner that worked to his satisfaction?
Over 1,000 prototypes
Over 3,000 prototypes
Over 5,000 prototypes
Over 10,000 prototypes
How long did it take Dyson to progress from prototype to commercial product?
5 years
10 years
15 years
25 years
In what year was the first Dyson machine launched?
1983
1993
2003
2013
As of the time the information was written, what is Dyson's net worth?
Over $5 billion
Over $10 billion
Over $15 billion
Over $20 billion
What is the break-even point in business?
The point where a business decides to stop production
The point where the costs of starting a business are recovered
The point at which both the costs and the revenue of a business are exactly equal
The point where a business reaches its maximum sales potential
What must total sales revenue equal for a business to break even?
It must exceed total costs.
It must be less than total costs.
It must exactly equal total costs.
It must be double the total costs.
Which of the following is an example of a fixed cost?
Sales commissions
Raw material costs
Rent for kitchen space
Cost of goods sold
Fixed costs are also sometimes referred to as:
Variable costs
Revenue
Overhead
Profit
Which of the following would not be considered a fixed cost?
Web hosting
Utilities
Rent
Loan payments that vary each month
What are variable costs?
Costs that remain constant regardless of production levels.
Costs that vary with production levels.
Costs that are only associated with employee wages.
Costs that include rent and utility bills.
Which of the following would be considered a variable cost for Food Gallery?
Rent on the kitchen space.
Employee wages.
Purchases of food and flowers from suppliers.
Both B and C are correct.
As Food Gallery's sales grow, what happens to the variable costs?
They decrease.
They remain the same.
They increase.
They are not affected by sales.
What does the calculation for the break-even point illustrate if you sell 5,000 meals next year at Food Gallery?
You will incur a loss.
You will make a profit.
You will break even.
You will double your investment.
What can cause a change in sales levels according to the text?
Changes in the weather.
A time of recession and customer spending habits.
Introduction of new technology.
Changes in management.
What might happen if Food Gallery does not sell the 5,000 meal units necessary to break even?
They will have to close the business.
They will have to reduce the number of employees.
They will not be able to pay all their expenses.
They will have to open a new branch.
Which of the following is a decision that the business owner of Food Gallery could make to address the problem of not reaching the break-even point?
Decrease the quality of the meals.
Raise the price of the product or cut costs.
Increase the number of employees.
Change the business location.
What can a chef do to increase revenue according to the text?
Change the amount of food used
Serve only one type of meal
Increase the number of staff
Decrease the quality of ingredients
If a business owner cuts their own annual pay by $5,000, which of the following statements is true based on the new break-even point calculation provided?
The fixed costs remain the same
The fixed costs increase from $50,000 to $55,000
The fixed costs decrease from $50,000 to $45,000
The gross profit per meal changes
According to the text, how many meals need to be sold to break even if the fixed costs are $45,000 and the gross profit per meal is $10?
4,000 meals
4,500 meals
5,000 meals
5,500 meals
By how much does decreasing your variable costs by $1 per meal lower your break-even point, assuming other variables remain the same?
A) 4,000 units
B) 4,545 units
C) 5,000 units
D) 3,500 units
What factors do you need to consider when calculating the Break Even Point?
the fixed costs
sales revenue per unit
variable costs per unit
output activity
Daisy is an artist. It costs her $150 per week to operate her art studio. In this case, what is the $150?
the break-even point
the fixed cost
the variable cost
the sales revenue
Sophie creates handbags from her home studio (costing $600 per month to operate). Each bag requires materials that cost $40. Each bag takes two hours to make (at $15 per hour). The baskets are sold for $125 each.
What is the variable cost per unit?
$40
$30
$125
$600
$70
Sophie creates handbags from her home studio (costing $600 per month to operate). Each bag requires materials that cost $40. Each bag takes two hours to make (at $15 per hour). The baskets are sold for $125 each.
What is the sales revenue per unit?
$40
$30
$125
$600
$70
Sophie creates handbags from her home studio (costing $600 per month to operate). Each bag requires materials that cost $40. Each bag takes two hours to make (at $15 per hour). The baskets are sold for $125 each.
What is the fixed cost?
$40
$30
$125
$600
$70
Sophie creates handbags from her home studio (costing $600 per month to operate). Each bag requires materials that cost $40. Each bag takes two hours to make (at $15 per hour). The baskets are sold for $125 each.
How many baskets does Sophie need to sell per month to break even?
(a)
Which is the correct formula to calculate the Break Even Point?
fixed costs / (sales revenue per unit - variable costs per unit)
fixed cost per unit / (sales revenue - variable costs)
sales revenue / (fixed costs per unit + variable costs per unit)
fixed costs + sales revenue - variable costs per unit
fixed costs / (sales revenue per unit + variable costs per unit)
If the Break Even Point for a cake decorator is 14, what does that mean?
they need to make 14 cakes each month
they need to sell 14 cakes per month
they need to sell at least 15 cakes per month
the cakes need to be at least $14 each
the variable costs for each cake add to $14
When a business has made enough money to pay its costs and begin to make a profit, it has reached its
break even point
variable-cost margin
fixed cost
selling price
Fixed costs are called this because they
must be paid within a set time
don't change when sales go up or down
are unpredictable and must be estimated
cost all businesses the same amount
If Ben's Etsy store sales double, his variable costs will likely
remain the same
decrease
increase
double
A business that does not reach their break even point will
go bankrupt
have profit and loss
lose money
need to relocate
One main reason for calculating the break even point is to help the business to
determine stock value
prepare an income statement
forecast sales
set selling prices
Businesses calculate the break even point in units so they know
how much profit they will earn after they break even
which products they should purchase for resale
which costs are variable and which are fixed
how many products they must sell to break even
Which one is not included in the Break Even formula?
variable costs per unit
total fixed costs
selling price per unit
cost price per unit
What does break even point show?
where a business is neither earning nor losing money
how many items they have to make
how much profit they're making
where a business has more fixed costs than variable
How is break even point measured?
dollars
loss
profit
items
What does a break even point of 54 units mean?
if they sell 55 units, they aren't making a profit
if they sell 54 units, they begin to make a profit
if they sell 55 units, they begin to make a profit
if they sell 54, they are at break even point
Which one is an example of a fixed cost?
resources
materials
temporary wages
rates
What are variable costs?
costs only related to making the product
overhead costs
combined costs
costs that include marketing
What is one limitation to calculating break even?
it helps projected sales
it is based on estimates
it is based on multiple products
it considers stock wastage
A break even graph includes total costs plotted alongside
total production
total revenue
total fixed costs
total units
