Break-even Charts - Unit 3

Question 1

Label the break even chart

Answer 1

.

Question 2

Variable costs? Ex?

Answer 2

Costs that change with output e.g supplies

Question 3

What are fixed costs? Ex?

Answer 3

Costs that don’t change with output e.g. Rent

Question 4

What is the break even point?

Answer 4

The point on the graph where total costs and revenue meet

Question 5

What is total revenue?

Answer 5

The amount of money earned by a business from selling its products.

Question 6

What is total costs?

Answer 6

The sum of all the coasts at any level of output

Question 7

What is the margin of safety?

Answer 7

The margin of safety is the amount of output between the actual level of output where profit is being made and the break-even level of output. This is how much production could fall before the business starts to make a loss.

Question 8

What is the formula for total revenue?

Answer 8

Quantity sold x average price

Question 9

What is the formula for total costs?

Answer 9

Fixed costs + variable costs

Question 10

What is the formula for break even?

Answer 10

Fixed costs ➗ contribution

Question 11

What is the formula for contribution?

Answer 11

Price per item - variable cost per item