Exam 10: Costs and Break-Even Analysis

Lucy expects to produce and sell 9,000 units at £20 each. Each unit will cost her £8 a unit to produce and fixed costs will be £50,000 per annum. What is the break-even point in units?

Gaby is planning to produce and sell baseball hats for Toby's concert. She expects to produce and sell 300 at a selling price of £8 each. Her breakeven point is 213 hats. To produce the hat, the following costs will be incurred: Fabric: £3 per hat Labour costs/hour: £8 per hour Rent of premises: £460 per annum Insurance: £180 per annum Each hat will take a carpenter 15 minutes to make. Which of the following statements is true?

If the contribution per unit is £15 and the breakeven point is 60,000 units. Which of the following statements could NOT be true?

Which of the following costs would be a fixed cost for Shaun, a knitwear manufacturer?

Which of the following definitions of break-even point is correct?

Which of the following is the most secure margin of safety for a business to have?

Toby is arranging for a rock concert to be held in the students union. The use of the hall will be free but security costs of £100 will have to be met. The cost of the main band will be £2,500 and the supporting band will cost £150. Tickets will be priced at £11 each. If Toby sells 500 tickets as he anticipates, what profit will this event make?

Toby is arranging for a rock concert to be held in the students union. The use of the hall will be free but security costs of £100 will have to be met. The cost of the main band will be £2,500 and the supporting band will cost £150. Tickets will be priced at £11 each. What is the break-even point for this event?

Gaby is planning to produce and sell baseball hats for Toby's concert. She expects to produce and sell 300 at a selling price of £8 each. Her break-even point is 213 hats. What is her margin of safety, as a percentage?

Which of the following most accurately describes a fixed cost?