Btec Business Revision Test Questions with correct
Solutions
Breakeven
When revenue and expenditure are the same. there is no profit or loss
variable costs
raw materials, change as output increases
margin of safety
is the amount by which sales would have to fall before the break-even point is reached
total costs
fixed costs plus variable costs
break-even point
when a business has made enough money through product sales to cover the cost of making the
product
selling price
total revenue divided by maximum number of products
increasing the price
break even point falls
reduce the price
break even point becomes higher
, break even analysis
planning tool that helps businesses to make the right decisions and increase their chances of
success
benefits of break even analysis
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
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
if costs change or if the selling price changes
if costs fall
the breakeven point is lower so the business makes a profit
the lower the breakeven point
the fewer the sales needed to make a profit
total sales revenue formula
number of sales times price per unit
Solutions
Breakeven
When revenue and expenditure are the same. there is no profit or loss
variable costs
raw materials, change as output increases
margin of safety
is the amount by which sales would have to fall before the break-even point is reached
total costs
fixed costs plus variable costs
break-even point
when a business has made enough money through product sales to cover the cost of making the
product
selling price
total revenue divided by maximum number of products
increasing the price
break even point falls
reduce the price
break even point becomes higher
, break even analysis
planning tool that helps businesses to make the right decisions and increase their chances of
success
benefits of break even analysis
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
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
if costs change or if the selling price changes
if costs fall
the breakeven point is lower so the business makes a profit
the lower the breakeven point
the fewer the sales needed to make a profit
total sales revenue formula
number of sales times price per unit
