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Questions and Answers
The volume of production is the only factor that influences fixed costs.
The volume of production is the only factor that influences fixed costs.
False (B)
The break-even point can be calculated using the formula BEP = TFC / (P + V).
The break-even point can be calculated using the formula BEP = TFC / (P + V).
False (B)
The unit contribution margin represents the total profit per unit sold.
The unit contribution margin represents the total profit per unit sold.
False (B)
The breakeven point is the point where total revenue is less than total cost.
The breakeven point is the point where total revenue is less than total cost.
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Break-even analysis is a type of demand-side analysis that considers market demand and sales projections.
Break-even analysis is a type of demand-side analysis that considers market demand and sales projections.
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If the variable cost per unit is $10 and the expected unit sales is 1000, then the total variable cost is $10,000.
If the variable cost per unit is $10 and the expected unit sales is 1000, then the total variable cost is $10,000.
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The break-even point calculation assumes that the selling price per unit increases with an increase in output.
The break-even point calculation assumes that the selling price per unit increases with an increase in output.
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A company incurs a fixed cost of $5,000 and a variable cost of $20 per unit, and the unit selling price is $100, then the unit contribution margin is $80.
A company incurs a fixed cost of $5,000 and a variable cost of $20 per unit, and the unit selling price is $100, then the unit contribution margin is $80.
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The margin of safety is the difference between the breakeven point and the actual sales level.
The margin of safety is the difference between the breakeven point and the actual sales level.
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If the total revenue is $10,000 and the total cost is $8,000, then the profit is $2,000.
If the total revenue is $10,000 and the total cost is $8,000, then the profit is $2,000.
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Flashcards
Fixed Costs and Production Volume
Fixed Costs and Production Volume
Fixed costs remain constant regardless of the production volume.
Break-Even Point
Break-Even Point
The break-even point is where total revenue equals total cost. It's the point where a business is neither making a profit nor incurring a loss.
Break-Even Point Formula
Break-Even Point Formula
The formula for calculating the break-even point is: BEP = TFC / (SP - VC), where TFC is the total fixed cost, SP is the selling price per unit, and VC is the variable cost per unit.
Unit Contribution Margin
Unit Contribution Margin
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Break-Even Analysis
Break-Even Analysis
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Total Variable Cost
Total Variable Cost
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Break-Even Calculation Assumptions
Break-Even Calculation Assumptions
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Margin of Safety
Margin of Safety
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Profit
Profit
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