Break-even Analysis Quiz

What is the purpose of break-even analysis?

• To determine the company's profit margin

• To estimate the number of units that must be produced and sold for a project to break-even

• To calculate the total revenue of a company

• To assess the market share of a product

What does the break-even point represent?

• The point where total costs are higher than total revenue

• The point where total costs are lower than total revenue

• The point where total costs equal total revenue

• The point where a company exits the market

What is revenue in business?

• The debt that a company owes

• The income that a company receives from its normal business activities

• The total expenses of a company

• The initial investment made into the company

What do profits or net income generally imply?

• Total revenue plus total expenses in a given period

• Total revenue minus total expenses in a given period

• Total expenses minus total revenue in a given period

• Total investments minus total debts in a given period

What does the break-even point on a break-even chart represent?

• The point where total costs exceed sales revenue

• The point where fixed costs are the highest

• The point where total sales equal total cost (i.e., no profit or loss is made)

• The point where variable costs begin to decrease

What is the term used to describe the difference between actual output and the break-even output?

• Break-even point

• Actual output

• Margin of safety

• Fixed cost

What is the break-even point?

• The point where total revenue exceeds total costs

• The point at which total costs are covered and no profit or loss is made

• The point where total costs exceed total revenue

• The initial investment point

Where does the break-even point occur on a chart?

• Where the fixed costs line intersects with the variable costs line

• Where the total revenue line intersects with the fixed costs line

• Where the total revenue and total cost lines intersect

• Where the variable costs line intersects with the contribution per unit line

How can the break-even point (BEP) be calculated?

• BEP = variable costs / fixed costs

• BEP = total revenue / total costs

• BEP = fixed costs / contribution per unit

• BEP = total costs / total revenue

What type of costs vary with the level of output and can be directly attributed to each unit?

• Fixed costs

• Indirect costs

• Variable costs

• Overhead costs