Break Even Quiz

Which of these is the correct term for the amount of money that is generated after a variable cost is subtracted?

• Gross Revenue
• Net Profit
• Contribution

• Operating Income

Which of these is the correct quantity name for the number of goods sold in order to break even?

• Pounds

• Pence

• Units

• Output

Which of these is a benefit of Break Even Analysis?

• It guarantees profit for all sales.
• It provides a detailed marketing strategy.
• It helps identify the minimum sales needed to avoid losses.
• It eliminates the need for financial forecasting.

Which of these is a limitation of Break Even Analysis?

• It oversimplifies costs and sales by making assumptions.

• It accurately predicts future sales trends.
• It considers all variable and fixed costs.
• It provides a detailed analysis of market conditions.

Which of these is the correct formula for working out total costs?

• Total Costs = Fixed Costs + Variable Costs
• Total Costs = Fixed Costs / Variable Costs
• Total Costs = Fixed Costs * Variable Costs
• Total Costs = Fixed Costs - Variable Costs

Which of these is the correct formula for working out total variable cost?

• Total Variable Cost = Fixed Cost per Unit × Quantity of Units
• Total Variable Cost = Total Cost - Fixed Costs
• Total Variable Cost = Variable Cost per Unit × Quantity of Units
• Total Variable Cost = Variable Cost per Unit + Quantity of Units

If a company's fixed costs are £1000 and their variable cost is £5 per unit with a sale price of £25, how many units do they need to sell to break even?

• 30 units
• 50 units
• 70 units
• 100 units

Which of these is NOT a variable cost?

• Labor costs
• Sales commissions
• Utility Bills

• Direct materials

Which of these is NOT a fixed cost?

• Insurance premiums
• Salaries of permanent staff
• Rent expenses
• Raw materials

Sketch out a break even graph and show me on the graph where the break even point would be.

You'll need to draw the lines for fixed costs, variable costs and revenue.