This quiz works best with JavaScript enabled. Home > Finance > Accounting > Cost Accounting > Break Even Analysis > Break Even Point – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Break Even Point Quiz 1 (30 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) Selling price-cost price. B) Fixed costs-variable costs. C) Selling price-variable cost. D) Cost price-selling 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) Diseconomies of scale. D) Purchasing economy of scale. Show Answer Correct Answer: C) Diseconomies of scale. 7. Which is not an example of a Cash Outflow? A) Interest repayments. B) Stock. C) Rent. D) Interest earnt on savings. Show Answer Correct Answer: D) 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 + contribution per unit. D) Fixed costs x contribution per unit. Show Answer Correct Answer: A) Fixed costs / contribution per unit. 10. Once a breakeven point is reached a firm begins A) Making a loss. B) Making interest. C) Making sales. D) Making profit. Show Answer Correct Answer: D) 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) An owner deciding on the positions for products in the shop. B) Deciding where a business is going to operate from. C) Deciding where the departments of a business are located. D) Deciding where a business is going to market its products. Show Answer Correct Answer: B) Deciding where a business is going to operate from. 13. What does break even point show? A) How many items to make. B) Where a business has more fixed costs than variable. C) How much profit they're making. D) Where a business is neither making a profit or loss. Show Answer Correct Answer: D) 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) Sales revenue by cost of sales. B) Gross profit by sales revenue. C) Profit by sales revenue. D) Profit by shareholders' equity. Show Answer Correct Answer: B) 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) 50. B) 150. C) 250. D) 1450. Show Answer Correct Answer: C) 250. 19. Government location grants are most likely to be given in regions of the country having A) Very high levels of employment. B) Many other firms starting up. C) Many similar businesses operating. D) Just experienced big firms closing down. Show Answer Correct Answer: D) 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 units. B) Break even sales dollars. C) Loss. D) Total cost. Show Answer Correct Answer: B) Break even sales dollars. 21. What is the break-even point in units for a company whose total fixed costs are $ 275, 450; selling price per unit is $ 16; and variable cost per unit is $ 14.75? A) 225, 120. B) 183, 633. C) 150, 300. D) 220, 360. Show Answer Correct Answer: D) 220, 360. 22. Ingredients are usually a A) Variable cost. B) Expensive cost. C) Selective cost. D) Fixed cost. Show Answer Correct Answer: A) Variable cost. 23. Which of the following calculations would you use to find total costs? A) Total Fixed Costs/Variable Cost Per Item. B) Total Fixed Costs / Selling Price-Variable Cost. C) Selling Price-Fixed Costs. D) Fixed Costs + Variable Costs. Show Answer Correct Answer: D) Fixed Costs + Variable Costs. 24. If there was a fall in fixed costs what impact would this have on the break-even output? A) Smaller output is necessary to break-even. B) Break-even is achieved at a lower level of output. C) Greater output necessary to break-even. D) Break-even is reached at a higher level of output. Show Answer Correct Answer: A) Smaller output is necessary to break-even. 25. The best definition of the contribution made by a product is: A) Profit made on each item sold. B) Revenue gained from selling each item. C) Difference between price and variable cost. D) Difference between price and fixed cost. Show Answer Correct Answer: C) Difference between price and variable cost. 26. Which of these is a risk of ignoring break even analysis? A) It allows the business to set a margin of safety. B) It allows the business to stock profitable goods. C) Costs of stock or materials may be too high and go unnoticed. D) None. Show Answer Correct Answer: C) Costs of stock or materials may be too high and go unnoticed. 27. According to the following data (Selling Price= $ 1000, Variable Cost= $ 268, Fixed Cost= $ 12.000) Calculate the breakeven ***3 minutes to answer*** A) 16.39. B) 16.93. C) 13.69. D) 19.36. Show Answer Correct Answer: A) 16.39. 28. If you have an increase in costs what effect would that have on the break-even point? A) Increase. B) Decrease. C) Stay the same. D) None of above. Show Answer Correct Answer: A) Increase. 29. On a break even chart, where is breakeven? A) Fixed Costs = Total Revenue. B) Variable Costs = Total Revenue. C) Total Costs = Fixed Costs. D) Total Revenue = Total Costs. Show Answer Correct Answer: D) Total Revenue = Total Costs. 30. What assumption does this statement say "Break even is 54 units" ? A) If we sell 54 we are not yet at break even point. B) If we sell 55 we aren't making a profit. C) If we sell 54 we begin to make a profit. D) If we sell 55 we begin to make a profit. Show Answer Correct Answer: D) If we sell 55 we begin to make a profit. 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 7 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books