Answer the following questions about break-even analysis.
1. Break-even is defined as the point at which _____________ equals _____________.
2. The contribution margin is equal to _____________ minus _____________.
3. The Local Town Concert Band has fixed costs of $500 per concert and variable costs of $2.00 per person who attends the concert. If they raise their ticket price from $2.25 to $2.50, their breakeven level
a. increases.
b. decreases.
c. stays the same.
4. The marginal contribution or contribution margin is the difference between _____________ and _____________.
5. The Campaign for Better Politicians expects to have $5,000 in fixed costs. If its fixed costs do not change but the amount of money each marcher raises through pledges (price/unit) declines from $75 to $60 and the variable cost/unit increases from $40 to $50, the break-even quantity will
a. increase.
b. decrease.
c. stay the same
6. If all other factors remain unchanged, an increase in the variable cost per unit of service will
a. reduce the break-even volume of service.
b. reduce the contribution margin per unit of service.
c. increase total fixed costs.
7. The difference between marginal revenue and marginal cost is called the _____________.
8. If an organization sells 10 fewer tickets to its annual gala than are needed to break even, the gala will produce
a. a loss or deficit.
b. break-even results.
c. a profit or surplus.