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Break-even

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  • What is total contribution?
    Contribution per unit × number of units sold
  • Which costs stay the same even if output changes?
    Commission
    Variable costs
    Fixed costs
    Labour costs
  • What is an advantage of budgeting?
    Increases revenue
    Helps control spending
    Stops competition
    Guarantees profit
  • A cash flow forecast is used to...
    Predict future cash inflows and outflows
  • What happens if selling price increases (all other things stay the same)?
    Break-even output falls
    Variable costs rise
    Fixed costs increase
    Break-even output rises
  • What is contribution per unit?
    Selling price - variable cost per unit
  • Which costs change with output?
    Variable costs
    Overheads
    Depreciation
    Fixed costs
  • What is the formula for break-even output?
    Fixed costs ÷ contribution per unit
  • Cash flow shows...
    The movement of money in and out of a business
  • What is a variance in budgeting?
    The difference between the budgeted and actual figures
  • Variable costs include...
    Wages for production workers
    Salaries for managers
    Insurance
    Rent
  • What is a weakness of budgeting?
    Budgets may be unrealistic
    Budgets reduce profit
    Budgets increase costs
    Budgets guarantee success
  • A fixed cost example is...
    Raw materials
    Rent
    Delivery costs
    Packaging
  • Break-even is when...
    Total revenue = total costs
  • When a business is at break-even
    Zero
    what is the profit?
  • What could cause break-even output to rise?
    Increase in fixed costs
    Increase in variable costs
    All of the above
    Decrease in selling price
  • What is the first step when calculating break-even?
    Find margin of safety
    Find total revenue
    Find profit margin
    Find contribution per unit
  • A margin of safety shows...
    How much output is above the break-even point
  • What is a budget?
    A plan of expected income and spending for a period of time
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