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Break-even Analysis

Quiz by Lee Kennedy

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40 questions
Show answers
  • Q1
    What does the break-even point represent in break-even analysis?
    The point where total costs and total revenue are equal
    The point where only fixed costs are covered
    The point where total revenue is maximized
    The point where production costs are minimized
    30s
  • Q2
    Which of the following factors might increase the break-even point for a business?
    An increase in the number of units sold
    An increase in selling price
    An increase in fixed costs
    A decrease in variable costs
    30s
  • Q3
    In break-even analysis, what is the formula to calculate the break-even point in units?
    \frac{\text{Variable Costs}}{\text{Fixed Costs} + \text{Selling Price per Unit}}
    \frac{\text{Selling Price per Unit}}{\text{Variable Cost per Unit} - \text{Fixed Costs}}
    \frac{\text{Fixed Costs} + \text{Variable Costs}}{\text{Selling Price per Unit}}
    \frac{\text{Fixed Costs}}{\text{Selling Price per Unit} - \text{Variable Cost per Unit}}
    30s
  • Q4
    What happens to the break-even point if the variable cost per unit increases, assuming everything else stays constant?
    The break-even point remains the same
    The break-even point decreases
    The break-even point becomes zero
    The break-even point increases
    30s
  • Q5
    In a break-even analysis graph, what does the point of intersection between the total cost line and the total revenue line represent?
    The maximum profit point
    The fixed cost level
    The break-even point
    The total variable cost
    30s
  • Q6
    If a company wants to lower its break-even point, which of the following strategies would be most effective?
    Increase the number of units produced
    Increase variable costs
    Reduce fixed costs
    Increase selling price
    30s
  • Q7
    What is the impact on break-even point if both selling price per unit and variable cost per unit increase by the same amount?
    The break-even point remains the same
    The break-even point decreases
    The break-even point becomes zero
    The break-even point increases
    30s
  • Q8
    How does an increase in fixed costs affect the break-even point, assuming selling price and variable costs remain unchanged?
    The break-even point decreases
    The break-even point becomes zero
    The break-even point remains the same
    The break-even point increases
    30s
  • Q9
    What effect does increasing the selling price per unit have on the break-even point, assuming all other factors remain constant?
    The break-even point becomes infinite
    The break-even point increases
    The break-even point decreases
    The break-even point remains the same
    30s
  • Q10
    Which of the following actions will not affect the break-even point?
    Changing the sales mix of products without changing prices or costs
    Increasing the selling price per unit
    Reducing the variable costs per unit
    Increasing the fixed costs
    30s
  • Q11
    In break-even analysis, what does the break-even point represent?
    The point where total revenue equals total costs
    The point where total revenue is greater than total costs
    The point where total production equals total sales
    The point where total variable costs equal total fixed costs
    30s
  • Q12
    Which of the following formulas is used to calculate the break-even point in units?
    Break-even Point = Selling Price per Unit - Variable Cost per Unit
    Break-even Point = Total Revenue / Total Costs
    Break-even Point = Fixed Costs + Variable Costs
    Break-even Point = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit)
    30s
  • Q13
    In break-even analysis, what is the 'contribution margin'?
    The overall profit after all expenses are deducted
    The total of fixed and variable expenses
    The amount remaining from sales revenue after variable expenses have been deducted
    The amount remaining from sales revenue after fixed expenses have been deducted
    30s
  • Q14
    What can be concluded if a business is operating above its break-even point?
    The business is making a profit
    The business is incurring a loss
    The business should increase its fixed costs
    The business's revenues are equal to its costs
    30s
  • Q15
    Which of the following factors will NOT affect the break-even point of a company?
    A change in the selling price per unit
    The choice of business location
    A change in variable costs per unit
    An increase in fixed costs
    30s

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