Finance

Question 1

Break Even Point

Answer 1

Break Even Analysis is a tool of business which aims to predict at what point the business will break even.

Question 2

Fixed costs

Answer 2

These don’t vary with 
the level of production. 
Fixed costs have to be 
paid whatever the 
level of output, even it 
nothing is being 
produced, eg rent.

Question 3

Variable costs

Answer 3

These costs vary 
directly with the level 
of production, eg fuel, 
labour and raw 
materials.