2.5

Question 1

What is a break even point?

Answer 1

The point where sales revenue equals total costs

no prodit or loss is made

Question 2

What are Fixed Costs?

Answer 2

Fixed Costs remain the same as output changes

Question 3

Example of Fixed Cost

Answer 3

Salaries,Rent rates

Question 4

What are Variable Costs?

Answer 4

Costs which change as output changes

Question 5

Examples of Variable Costs

Answer 5

Wages

raw materials

Question 6

Significance of Break Even Point

Answer 6

Can help in making decision about the level of output to produce in order to start making profits as early as possible

the price which needs to be charged for products

how changes in price would affect the firms profits

Question 7

Break Even Formulau

Answer 7

Selling price per unit - Variable Cost per Unit

Question 8

What is Margin of Safety

Answer 8

The MARGIN OF SAFETY is the difference between what the firm is currently producing and the break-even
point,

It is a safe margin because the business will be making a profit, between these two point.