Appendix: Breakeven Analysis

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Question 1
Free
Multiple Choice

The breakeven point occurs where total revenues intersect with:

Choose correct answer/s
A

market returns

B

the risk-free rate

C

total costs

D

total interest and taxes

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Question 2
Free
Multiple Choice

Breakeven analysis is normally performed for a planning period of:

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A

five years

B

one year or less

C

ten years

D

one month

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Question 3
Free
Multiple Choice

An example of a noncash outlay is:

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A

property

B

marketing costs

C

advertising

D

depreciation

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Question 4
Free
Multiple Choice

Breakeven analysis can be used to assess ____ risk.

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A

financial

B

operating

C

sales

D

volume

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Question 5
Free
Multiple Choice

Breakeven analysis can be used:

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A

when planning renovations

B

when planning expansions

C

when planning financial resources

D

when planning new product development

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Question 6
Multiple Choice

The uses of breakeven analysis are all of the following EXCEPT:

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A
forecasting the profitability of the firm
B
forecasting the impact of certain economic conditions on the firm's profitability
C
analyzing the impact of substituting fixed costs for variable costs in production
D
analyzing the profit impact of a firm's restructuring efforts.
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Question 7
Multiple Choice

The difference between the selling price per unit and the variable cost per unit is the:

Choose correct answer/s
A
contribution to the bottom line
B
contribution to revenue
C
contribution margin
D
contribution to EBIT
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Question 8
Multiple Choice

Another name for breakeven analysis is:

Choose correct answer/s
A
cost-volume-profit analysis
B
graphic analysis
C
EBIT-EPS analysis
D
degree of operating leverage
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Question 9
Multiple Choice

In a graphic breakeven analysis, the point where total revenue is less than total cost indicates that the firm has:

Choose correct answer/s
A
net operating capital
B
cash flow from investing
C
a negative EBIT
D
a positive return on capital
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Question 10
Multiple Choice

The contribution margin per unit is the difference between:

Choose correct answer/s
A
the selling price per unit and fixed costs
B
the fixed costs and the variable costs
C
the variable cost per unit and the selling price per unit
D
the variable costs and the number of units sold
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Question 11
Multiple Choice

The Foggy Futures Weather Network offers an annual almanac for sale each year with information about predicted weather patterns, severe storm safety tips and a tracking chart. The finished product sells for $35 with a variable cost per unit of $21. The company has operating costs of $1,050,000. What is the firm's breakeven point in units?

Choose correct answer/s
A
75,000
B
50,000
C
80,000
D
65,000
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Question 12
Multiple Choice

The Foggy Futures Weather Network offers an annual almanac for sale each year with information about predicted weather patterns, severe storm safety tips and a tracking chart. The finished product sells for $35 with a variable cost per unit of $21. The company has operating costs of $1,050,000. The company has operating costs of $1,050,000. What is the firm's breakeven point in dollars?

Choose correct answer/s
A
$1,750,000
B
$4,670,000
C
$2,625,000
D
$3,875,566
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Question 13
Multiple Choice

The Foggy Futures Weather Network offers an annual almanac for sale each year with information about predicted weather patterns, severe storm safety tips and a tracking chart. The finished product sells for $35 with a variable cost per unit of $21. The company has operating costs of $1,050,000. Using 100,000 units as a base, what is the degree of operating leverage?

Choose correct answer/s
A
6.2
B
5.7
C
7.9
D
4.0
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Question 14
Multiple Choice

The Foggy Futures Weather Network offers an annual almanac for sale each year with information about predicted weather patterns, severe storm safety tips and a tracking chart. The finished product sells for $35 with a variable cost per unit of $21. The company has operating costs of $1,050,000. What is the probability of the firm having operating losses if the firm has a standard deviation of 4,000 units and the firm expects to sell 80,000 almanacs? (A normal distribution table - Table V - must accompany this problem)

Choose correct answer/s
A
10.56%
B
11.12%
C
14.92%
D
13.57%
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Question 15
Multiple Choice

Bouncy Bungee Rubber Band Company is trying to determine its probability of incurring a loss. Its fixed costs are $2,760,000 per year, it sells its rubber bands for $3.75 per pack and the variable cost of these packs is $.75. They estimate they will sell 1,000,000 packs this year and they have a standard deviation of 40,000 units. (A normal distribution table - Table V - must accompany this problem).

Choose correct answer/s
A
3.22%
B
6.71%
C
5.48%
D
2.87%
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Question 16
Multiple Choice

Kettle of Fish Hatcheries provides a stocked pond for fishing enthusiasts. They have fixed costs of $525,000, they charge $50 per person for pond access and the variable costs of stocking the pond average about $15 per person. How many people need to fish the pond annually to break even?

Choose correct answer/s
A
45,000
B
15,000
C
32,000
D
10,000
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Question 17
Multiple Choice

What is the breakeven point for Rough and Tough Clothiers, makers of heavy duty dungarees? They have the following costs: image
The price of the dungarees is $55 per pair.

Choose correct answer/s
A
13,040
B
10,867
C
25,000
D
17,650
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Question 18
Multiple Choice

The Fanny Nanny Weight Monitors Corporation offers an annual diet plans for sale each year with information about nutrition, diet tips and food substitutes. The finished product sells for $60 with a variable cost per unit of $27. The company has fixed operating costs of $1,250,000. What is its breakeven point?

Choose correct answer/s
A
22,187
B
37,879
C
56,124
D
48,961
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Question 19
Multiple Choice

What is the breakeven point in dollars for Zippy Dippy Swimwear, makers of bathing suits and accessories? They have the following costs: image
The price of each suit is $85.
The price of each towel is $25.
The price of each umbrella is $40.
The price of each cover-up is $81.

Choose correct answer/s
A
$3,172,024
B
$4,947,196
C
$7,887,259
D
$6,425,583
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Question 20
Essay

What are the possible uses for breakeven analysis?

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