Financial Planning (Edexcel A-Level Business): Quizzes
📚Quizzes
Practise the questions
10 questions from this quiz
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Practise the questions
10 questions from this quiz
What is contribution in break-even analysis?
What is contribution in break-even analysis?
Sales revenue minus variable costs
A product sells for £80 with variable costs of £55 per unit. What is the unit contribution?
A product sells for £80 with variable costs of £55 per unit. What is the unit contribution?
£25
How is break-even output calculated?
How is break-even output calculated?
Fixed costs ÷ Contribution per unit
If total contribution is £50,000 and fixed costs are £30,000, what is the profit?
If total contribution is £50,000 and fixed costs are £30,000, what is the profit?
£20,000
What does the break-even point show?
What does the break-even point show?
When total revenue equals total costs
On a break-even chart, what does the loss zone represent?
On a break-even chart, what does the loss zone represent?
Area where total costs exceed revenue
Current output is 800 units and break-even is 600 units. What is the margin of safety?
Current output is 800 units and break-even is 600 units. What is the margin of safety?
200 units
What does a small margin of safety indicate?
What does a small margin of safety indicate?
Higher risk of making losses
Which decision can break-even analysis help businesses make?
Which decision can break-even analysis help businesses make?
Pricing decisions for products
What is a key limitation of break-even analysis?
What is a key limitation of break-even analysis?
It assumes all output is sold immediately