This quiz works best with JavaScript enabled. Home > Accounting > Cost Accounting > Break Even Analysis > Break Even Point – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Break Even Point Quiz 1 (20 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is Margin of Safety A) The amount by which break even falls to make a loss. B) The difference between break even and actual output/number of customers. C) None of these. D) Both of these. Show Answer Correct Answer: B) The difference between break even and actual output/number of customers. 2. If a breakeven point is 365 units and you sell 1 unit per day, how long will it take to breakeven? A) 52 weeks. B) 1 year. C) 365 days. D) All of the above. Show Answer Correct Answer: D) All of the above. 3. What is contribution margin? A) Cost price-selling price. B) Fixed costs-variable costs. C) Selling price-variable cost. D) Selling price-cost price. Show Answer Correct Answer: C) Selling price-variable cost. 4. How could a business improve its cash flow in the short term? A) By reducing costs such as reducing wages. B) By producing less products. C) By increasing staff bonuses and perks. D) By increasing costs. Show Answer Correct Answer: A) By reducing costs such as reducing wages. 5. On a break-even chart, what line does the total revenue line meet at the break-even point? A) The fixed cost line. B) The variable cost line. C) The total cost line. D) None of above. Show Answer Correct Answer: C) The total cost line. 6. Factors that lead to higher average costs as a business expands A) Margin of safety. B) Contribution per unit. C) Purchasing economy of scale. D) Diseconomies of scale. Show Answer Correct Answer: D) Diseconomies of scale. 7. Which is not an example of a Cash Outflow? A) Stock. B) Interest repayments. C) Interest earnt on savings. D) Rent. Show Answer Correct Answer: C) Interest earnt on savings. 8. If there was a rise in variable costs what effect would this have on the break even chart? A) Total cost line pivots downwards. B) Fixed cost line and total cost line move upwards in a parallel shift. C) Total cost line pivots upwards. D) Revenue line pivots upwards. Show Answer Correct Answer: C) Total cost line pivots upwards. 9. Formula for breakeven = A) Fixed costs + contribution per unit. B) Fixed costs-contribution per unit. C) Fixed costs x contribution per unit. D) Fixed costs / contribution per unit. Show Answer Correct Answer: D) Fixed costs / contribution per unit. 10. Once a breakeven point is reached a firm begins A) Making a loss. B) Making profit. C) Making interest. D) Making sales. Show Answer Correct Answer: B) Making profit. 11. If the variable costs are $ 2 per unit, then the total variable costs of producing 5 000 units will be: A) $ 1 000. B) $ 2 500. C) $ 5 002. D) $ 10 000. Show Answer Correct Answer: D) $ 10 000. 12. The 'location decision' for a business means: A) Deciding where the departments of a business are located. B) An owner deciding on the positions for products in the shop. C) Deciding where a business is going to operate from. D) Deciding where a business is going to market its products. Show Answer Correct Answer: C) Deciding where a business is going to operate from. 13. What does break even point show? A) Where a business is neither making a profit or loss. B) How many items to make. C) How much profit they're making. D) Where a business has more fixed costs than variable. Show Answer Correct Answer: A) Where a business is neither making a profit or loss. 14. Units sold ..... the break-even point will generate a ..... for the business. A) Near, loss. B) Above, profit. C) Above, loss. D) Below, profit. Show Answer Correct Answer: B) Above, profit. 15. The gross profit margin ratio is calculated by dividing: A) Profit by sales revenue. B) Profit by shareholders' equity. C) Gross profit by sales revenue. D) Sales revenue by cost of sales. Show Answer Correct Answer: C) Gross profit by sales revenue. 16. Insurance is usually a fixed cost because A) Every business needs insurance. B) The Gecko says so. C) This expense does not change relative to a firm's sales. D) It is typically a large expense. Show Answer Correct Answer: C) This expense does not change relative to a firm's sales. 17. If the selling price is increased but the variable cost per unit remains the same: A) Unit contribution is unchanged. B) Unit contribution is decreased. C) Unit contribution is increased. D) None of above. Show Answer Correct Answer: C) Unit contribution is increased. 18. Bart should break-even at 600 ice creams per month. He believes that he can sell 850 ice creams per month. What is his margin of safety? A) 250. B) 1450. C) 150. D) 50. Show Answer Correct Answer: A) 250. 19. Government location grants are most likely to be given in regions of the country having A) Many similar businesses operating. B) Just experienced big firms closing down. C) Very high levels of employment. D) Many other firms starting up. Show Answer Correct Answer: B) Just experienced big firms closing down. 20. The amount of revenue needed to cover fixed and variable costs so that a business breaks even is called A) Break even sales dollars. B) Loss. C) Total cost. D) Break even sales units. Show Answer Correct Answer: A) Break even sales dollars. Next →Related QuizzesCost Accounting QuizzesAccounting QuizzesBreak Even Point Quiz 2Break Even Point Quiz 3Break Even Point Quiz 4Break Even Point Quiz 5Break Even Point Quiz 6Break Even Point Quiz 7Break Even Point Quiz 8Break Even Point Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books