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Calculate the variable cost per unit in February for Areej juice if:

fixed costs are 5,550 AED, variable costs are 3,300 AED and the total output is 1,500.

fixed costs are 5,550 AED, variable costs are 3,300 AED and the total output is 1,500.

A

2.2 AED

B

5.8 AED

C

4,955 AED

D

8,325 AED

What is the break-even point?

A

It is the exact number where total revenue equals total costs.

B

It is the number of revenue divided by costs.

Why do we use the break-even point?

A

To set prices and know how many products to sell to make a profit.

B

To know which method of production to use.

How do we calculate the break-even point?

A

1. selling price per unit/ variable cost per unit 2. total fixed costs/ contribution per unit

B

1. total revenue/ total fixed costs 2. fixed costs/ average costs

Which line do we draw first on a break-even chart?

A

total revenue

B

total cost

C

fixed cost

Which line is parallel to the variable costs line?

A

total revenue

B

total cost

C

fixed cost

Why do we use the break-even chart?

A

to show where all the costs are

B

to show where the break-even point is

C

to show the number of output