CFE Review 5

Which two of the following statements best describe the term break even? Select two answers:The point where:

• The business is just making a profit

• Total revenue and total fixed costs are the same

• The business is making neither a profit or loss

• Total costs are higher than total revenue

• Total revenue and total costs are equal

In which two of the following situations would a business be in a loss making situation? Select two answers: Where:

• Total revenue is greater than the sum of total fixed costs and total variable costs

• Total revenue is less than total variable costs and total fixed costs

• Total fixed costs and total variable costs are lower than total revenue

• Total costs are less than total revenue

• Total costs are higher than total revenue

The small business, in question 10, expects that its fixed costs will increase by 25% next year. To overcome this change, the business plans to increase its sales price per unit by 100%. Its variable cost per unit is expected to remain as 1/3 of the sales price per unit. Which one of the following is the business’s break even point in costs/revenue?

• £30,000

• £36,000

• £45,000

• £90,000

A small business has fixed costs of £24,000 and an average sales price per unit of £9. If the variable cost per unit is 1/3 of the sales price per unit, which of the following is the business’s break even point in units?

• 2,000 units

• 2,667 units

• 4,000 units

• 8,000 units

A business takes out a bank loan of £15,000. The loan will be repaid over 3 years, with a monthly repayment of £500. The total interest the business will pay for this loan is:

• £1,500

• £3,000

• £15,500

• £8,000

If the business in question 7 sold 100,000 units during the year, its variable cost per unit equalled:

• £0.80

• £1.25

• £3.00

• £7.50

Last year, a business made £300,000 profit from sales revenue of £750,000. Its total variable costs equalled £125,000. The value of the business’s fixed costs was:

• £175,000

• £325,000

• £450,000

• £625,000

The graph below shows the number of customers that visited a hairdressing business during one trading week. The average sales price per customer is £30. Based on this information, the business’s average daily trading revenue to the nearest £ is:

• £43

• £909

• £1,272

• £6,360

A business has an agreed overdraft limit of £10,000, which it has used 75% of, on average, throughout the year. The interest rate on the overdraft facility is 15% per annum. Which one of the following represents the amount of interest the business paid this year on its overdraft?

• £1,125

• £1,500

• £7,500

• £8,625

A break even diagram for Business X is shown below. Based on this information, which one of the following is the correct value of its fixed costs at 3,000 units?

• £20,000

• £40,000

• £50,000

• £90,000