1) What is break even? a) It is when a business sells enough units to cover the business ' costs b) It is when a business makes enough money to make aprofit c) It is when a business makes a loss 2) Choose 2 options that are fixed costs a) Rent b) Electricity c) Ingredients d) Packaging 3) Choose the formula for the break even a) Variable cost per unit - Selling price per unit/(divided by) Fixed Costs b) Selling price per unit - Variable cost per unit -(divided by) Fixed Costs c) Fixed Costs / (divided by ) Selling price per unit - Variable cost per unit 4) The CVP analysis assumes a) Costs are assumed to be either fixed or variable, or at least separable into these elements. b) Variable costs change in direct proportion to volume. c) Selling prices do not change with volume d) Contribution per unit = selling price per unit – total variable cost per unit. e) Fixed costs do not remain fixed throughout the activity range charted. f) Selling prices change with volume. 5) What is the Margin of safety ? a) The margin of safety is the amount by which the anticipated (budgeted) sales can fall before the business makes a loss. b) The margin of safety is the amount by which the anticipated (budgeted) sales can fall before the business makes a profit. c) Margin of safety (units) = Budgeted sales units – Breakeven sales units d) Margin of safety (units) = Breakeven sales units – Budgeted sales units 6) What is the Profit/Volume ratio ? a) The P/V ratio is a measure of the rate at which profit (or, strictly, contribution) is generated with sales volume, as measured by revenue. b) The P/V ratio is a measure of the rate at which sales is generated with profit volume. c) The P/V ratio = contribution per unit divided by selling price per unit
Break even - AAT - Management Accounting
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