1.3.2c Break-even output and margin of safety Quiz: Pearson Edexcel Business, Unit 3

The 20 questions

1. Fixed costs are £6,000, price is £10 and variable cost is £4 per unit. What is the break-even output in units?

   • 600 units
   • 1,000 units
   • 429 units
   • 2,000 units

2. Break-even is 1,000 units and actual sales are 1,500 units. What is the margin of safety?

   • 3,000 units
   • 500 units
   • 2,500 units
   • 1,000 units

3. Fixed costs are £12,000, price is £20 and variable cost is £8 per unit. What is the break-even output in units?

   • 1,000 units
   • 2,000 units
   • 600 units
   • 429 units

4. Break-even is 1,000 units and actual sales are 1,250 units. What is the margin of safety?

   • 500 units
   • 2,250 units
   • 250 units
   • 3,000 units

5. Fixed costs are £8,000, price is £15 and variable cost is £7 per unit. What is the break-even output in units?

   • 364 units
   • 533 units
   • 2,000 units
   • 1,000 units

6. Break-even is 1,000 units and actual sales are 1,400 units. What is the margin of safety?

   • 800 units
   • 2,400 units
   • 400 units
   • 3,000 units

7. Fixed costs are £5,000, price is £12 and variable cost is £2 per unit. What is the break-even output in units?

   • 417 units
   • 1,000 units
   • 500 units
   • 357 units

8. Break-even is 500 units and actual sales are 900 units. What is the margin of safety?

   • 1,500 units
   • 400 units
   • 1,400 units
   • 800 units

9. Fixed costs are £9,000, price is £6 and variable cost is £3 per unit. What is the break-even output in units?

   • 1,000 units
   • 6,000 units
   • 1,500 units
   • 3,000 units

10. Break-even is 3,000 units and actual sales are 3,500 units. What is the margin of safety?

    • 1,000 units
    • 6,500 units
    • 9,000 units
    • 500 units

11. Fixed costs are £3,000, price is £5 and variable cost is £1 per unit. What is the break-even output in units?

    • 600 units
    • 1,500 units
    • 750 units
    • 500 units

12. Break-even is 750 units and actual sales are 1,000 units. What is the margin of safety?

    • 2,250 units
    • 1,750 units
    • 500 units
    • 250 units

13. On a break-even diagram, the margin of safety is shown by which gap?

    • The gap between the current sales level and the break-even output
    • The gap between the sales line and the vertical axis at zero output
    • The gap between the price line and the variable cost line only
    • The gap between total costs and fixed costs at zero output

14. Why is a larger margin of safety generally better for a business?

    • It means the business always earns a profit regardless of how sales change
    • It means sales can fall further before the business starts making a loss
    • It means the business has no fixed costs to pay at any output
    • It means the business can avoid paying variable costs for each unit

15. Fixed costs are £7,200, price is £12 and variable cost is £6 per unit. What is the break-even level of output?

    • 400 units
    • 600 units
    • 1,200 units
    • 2,400 units

16. Fixed costs are £4,000, price is £8 and variable cost is £3 per unit. What is the break-even level of output?

    • 500 units
    • 364 units
    • 1,600 units
    • 800 units

17. Fixed costs are £10,000, price is £25 and variable cost is £15 per unit. What is the break-even level of output?

    • 1,000 units
    • 250 units
    • 2,000 units
    • 400 units

18. Fixed costs are £2,400, price is £6 and variable cost is £2 per unit. What is the break-even level of output?

    • 400 units
    • 1,200 units
    • 600 units
    • 300 units

19. Fixed costs are £15,000, price is £30 and variable cost is £12 per unit. What is the break-even level of output?

    • 357 units
    • 1,667 units
    • 833 units
    • 500 units

20. Fixed costs are £3,600, price is £9 and variable cost is £4 per unit. What is the break-even level of output?

    • 277 units
    • 400 units
    • 1,440 units
    • 720 units

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