Btec Business Revision (Questions with correct answers)

Breakeven correct answers When revenue and expenditure are the same. there is no profit or loss variable costs correct answers raw materials, change as output increases margin of safety correct answers is the amount by which sales would have to fall before the break-even point is reached total costs correct answers fixed costs plus variable costs break-even point correct answers when a business has made enough money through product sales to cover the cost of making the product selling price correct answers total revenue divided by maximum number of products increasing the price correct answers break even point falls reduce the price correct answers break even point becomes higher break even analysis correct answers planning tool that helps businesses to make the right decisions and increase their chances of success benefits of break even analysis correct answers business knows the fixed and variable costs linked to a product. the business can set the best price for a product. it allows the business to set a margin of safety. risks of ignoring breakeven analysis correct answers the business does not know the costs of production and running costs. the business does not know how many items it must sell to make a profit. the business may make a loss without realising or knowing why. break even point will change correct answers if costs change or if the selling price changes if costs fall correct answers the breakeven point is lower so the business makes a profit the lower the breakeven point correct answers the fewer the sales needed to make a profit total sales revenue formula correct answers number of sales times price per unit to make a profit correct answers revenue must be higher than expenditure profit formula correct answers revenue take away expenditure netflow/outflow formula correct answers inflows take away outflows