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# Break even analysis

A level and AS level

➡️QUESTION⬅️

When a company had sales revenue of \$600 000, its variable costs were \$300 000.

At the break-even point, its sales were \$400 000.

How much profit did it make when sales were \$600 000?

A \$100000
B \$200000
C \$300000
D \$400000

➡️QUESTION⬅️

A business has total fixed costs of \$240000. Products have a unit selling price of \$25 and a unit
variable cost of \$15.

How many units need to be sold to break even?

A 6000
B 9600
C 16000
D 24000

➡️QUESTION⬅️

Which statements identify a disadvantage of break-even analysis?

1 It does not show the effect of changes in output on the break-even point.

2 It is assumed that all costs can be split between fixed and variable.

3 It makes it difficult to decide the profitability of a product at different levels of activity.

A 1and2
B 2and3
C 2only
D 3only

➡️QUESTION⬅️

How is the margin of safety calculated?

A actual contribution less budgeted contribution
B actual profit less budgeted profit
C budgeted contribution less break-even point
D budgeted sales less break-even point

➡️QUESTION⬅️

A product has a variable cost of \$31.32 per unit. Total fixed costs are \$93 600.

When production is 13000 units the margin of safety is 5000 units.

What is the selling price per unit?

A \$36.52
B \$38.52
C \$43.02
D \$50.04