Calculating profitability involves first working out the minimum level of sales required to cover all costs.
What is a business doing at the break-even point?
Making a profit
Making a loss
Making neither a profit or a loss
What is a business doing when it sells output beyond the break-even point?
On a break-even chart, what line does the the total revenue line meet at the break-even point?
The fixed cost line
The variable cost line
The total cost line
On a break-even chart, what is the total cost above the break-even point?
Less than total revenue
Equal to total revenue
Greater than total revenue
What does break-even analysis NOT assume?
All units are sold
External environment is unstable
Forecasts are reliable
When does the break-even point change?
When costs go up
When costs go down
When costs change
When does the break-even point fall?
What is contribution?
The price of an item minus the total cost
The price of an item minus the fixed cost per item
The price of an item minus the variable cost per item
If average variable cost is £10, and average selling price is £25, then what is contribution?
If the average variable costs £10, average selling price is £25 and fixed costs are £60,000, then what is the break-even output?