Using break-even (Edexcel GCSE Business): Quizzes
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Practise the questions
12 questions from this quiz
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Practise the questions
12 questions from this quiz
What is the primary purpose of break-even analysis?
What is the primary purpose of break-even analysis?
A decision-making tool for planning
On a break-even chart, what does the slope of the total revenue line represent?
On a break-even chart, what does the slope of the total revenue line represent?
The selling price per unit
Why is the fixed costs line horizontal on a break-even chart?
Why is the fixed costs line horizontal on a break-even chart?
Fixed costs remain constant with output
What does the break-even point represent?
What does the break-even point represent?
Where total revenue equals total costs
Where does the total costs line start on a break-even chart?
Where does the total costs line start on a break-even chart?
At the level of fixed costs
What is the formula for calculating margin of safety?
What is the formula for calculating margin of safety?
Actual sales - Break-even sales
If break-even is 1,000 units and actual sales are 1,700 units, what is the margin of safety?
If break-even is 1,000 units and actual sales are 1,700 units, what is the margin of safety?
700 units
How does increasing prices help lower the break-even point?
How does increasing prices help lower the break-even point?
Each unit contributes more to fixed costs
Which methods can reduce variable costs per unit?
Which methods can reduce variable costs per unit?
Cheaper suppliers or better efficiency
What type of costs should be cut to reduce the amount needed to recover through sales?
What type of costs should be cut to reduce the amount needed to recover through sales?
Fixed costs like rent or admin
What critical assumption does break-even analysis make?
What critical assumption does break-even analysis make?
All units produced will be sold
Why might lowering prices to reduce break-even backfire?
Why might lowering prices to reduce break-even backfire?
Customers may link low prices to poor quality