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Breakeven Point Relationship Quiz

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Questions and Answers

Which of the following is an example of a variable cost?

Salaries of permanent employees

Rent for the factory building

Depreciation on machinery

Cost of raw materials used in production (correct)

What is the primary benefit of calculating the breakeven point?

It provides insight into the level of sales needed to cover all costs (correct)

It helps determine the minimum selling price for a product

It aids in forecasting future cash flows

It helps in deciding the optimal mix of fixed and variable costs

Which of the following costs is considered a fixed cost?

Commissions paid to salespeople

Property taxes on the business premises (correct)

Overtime wages paid to production workers

Shipping costs for delivering products

What type of cost is considered semi-variable?

Electricity costs for a factory Signup and view all the answers

At the breakeven point, a company's total revenue is equal to:

Total variable costs plus total fixed costs Signup and view all the answers

What is the breakeven point?

The point at which total revenue equals total costs Signup and view all the answers

Which of the following best describes a variable cost?

A cost that changes in direct proportion to changes in production levels Signup and view all the answers

What happens to the breakeven point if variable costs increase?

The breakeven point increases Signup and view all the answers

At the breakeven point, what is the relationship between total revenue and total costs?

Total revenue equals total costs Signup and view all the answers

Which of the following statements is true about the relationship between variable cost, fixed cost, and volume of production at the breakeven point?

Variable costs equal fixed costs Signup and view all the answers