Break Even Point Analysis MCQ Quiz - Objective Question with Answer for Break Even Point Analysis - Download Free PDF
Last updated on Jun 10, 2025
Latest Break Even Point Analysis MCQ Objective Questions
Break Even Point Analysis Question 1:
"A company has the data of a product as:
Fixed cost / month = ₹ 60,000
Variable cost / unit = ₹ 210
Selling price / unit = ₹ 320
Production capacity = 1600 unit / month.
If the production is carried out at 80% of the rated capacity, what will be the monthly profit?"
Answer (Detailed Solution Below)
Break Even Point Analysis Question 1 Detailed Solution
Given:
- Fixed cost = ₹60,000
- Variable cost per unit = ₹210
- Selling price per unit = ₹320
- Rated capacity = 1600 units/month
- Production = 80% of 1600 = 1280 units
Step 1: Total Revenue
\( 1280 \times 320 = ₹409,600 \)
Step 2: Variable Cost
\( 1280 \times 210 = ₹268,800 \)
Step 3: Total Cost
\( ₹60,000 + ₹268,800 = ₹328,800 \)
Step 4: Profit
\( ₹409,600 - ₹328,800 = ₹80,800 \)
Break Even Point Analysis Question 2:
The data for break-even analysis of a product are given as-fixed cost is Rs. 10,000; variable cost is Rs. 10/unit; selling price is Rs. 15/unit. The break-even volume is
Answer (Detailed Solution Below)
Break Even Point Analysis Question 2 Detailed Solution
Concept:
Break-even analysis is a method used to determine the sales volume required for a company to “break-even”, or experience neither a profit nor a loss on the sale of its product.
The break-even represents the number of units that must be made and sold for income from sales to equal the cost of producing the product.
A breakeven analysis is used to determine how much sales volume your business needs to start making a profit, based on your fixed costs, variable costs, and selling price.
BEP in terms of physical unit:
\({\rm{BEP}} = {{\rm{X}}_{{\rm{BEP}}}} = \frac{{{\rm{Total\;Fixed\;cost}}}}{{{\rm{Contribution\;per\;unit}}}} = \frac{{\rm{F}}}{{{\rm{s}}\; -\; {\rm{v}}}}\)
where F is the fixed cost
s = sales price of one product, v = variable cost of one product
Calculation:
Given:
F = Rs. 10000, s = Rs. 15 and v = Rs. 10
Break-Even Quantity = \(\frac{F}{{s \;-\; v}}\)
\(\therefore BEP = \frac{F}{{s \;- \;v}} = \;\frac{{10000}}{{15 \;- \;10}} = 2000\;units.\)
Break Even Point Analysis Question 3:
Find the value of Break Even Point for the following data.
Sales = Rs. 1000000, Fixed cost = Rs. 90000, Variable cost = Rs. 600000Answer (Detailed Solution Below)
Break Even Point Analysis Question 3 Detailed Solution
Concept:
\({\left( {P/V} \right)_{ratio}}\; = \left( {\frac{{S - V}}{S}} \right) \times 100\% \)
\(BEP = \frac{{Fixed\;cost}}{{{{\left( {\frac{P}{V}} \right)}_{ratio}}}}\)
Calculation:
\({\left( {\frac{P}{V}} \right)_r} = \frac{{\left( {1000000 - 600000} \right)}}{{1000000}} = \frac{4}{{10}} \times 100 = 40\;\% \)
\(BEP = \frac{{90000}}{{0.4}} = 2,25,000\)
Break Even Point Analysis Question 4:
Breakeven point (BEP) indicates
Answer (Detailed Solution Below)
Break Even Point Analysis Question 4 Detailed Solution
Explanation:
Breakeven analysis is used to find the minimum level of production required. It evaluates both fixed and variable costs.
A breakeven analysis is used to determine how much sales volume your business needs to start making a profit, based on your fixed costs, variable costs, and selling price.
Break-even analysis consists of:
- Fixed cost (F)
- Variable cost (V)
- Sales revenue (S)
\(BEP = \left( {\frac{F}{{S - V}}} \right)\)
Break-even point is the point where total cost and sales revenue lines intersect.
Breakeven point (BEP) indicates recovery of both fixed cost and variable cost.
Break Even Point Analysis Question 5:
At breakeven point
A. Total cost is more than sales revenue
B. Total cost is less than sales revenue
C. Total cost is equal to sales revenue
D. Fixed cost is equal to variable cost
Answer (Detailed Solution Below)
Break Even Point Analysis Question 5 Detailed Solution
Top Break Even Point Analysis MCQ Objective Questions
At break even point slope of sales line is equal to
Answer (Detailed Solution Below)
Break Even Point Analysis Question 6 Detailed Solution
Download Solution PDFExplanation:
Breakeven analysis is used to find the minimum level of production required. It evaluates both fixed and variable costs.
A breakeven analysis is used to determine how much sales volume your business needs to start making a profit, based on your fixed costs, variable costs, and selling price.
Break-even analysis consists of:
- Fixed cost (F)
- Variable cost (V)
- Sales revenue (S)
\(BEP = \left( {\frac{F}{{S - V}}} \right)\)
From the diagram, the slope of the sales line at BEP will be given by,
\(Slope~of~sales~line =\frac{{Total~Cost}}{{Total~Sales~at~ BEP}}\)
At BEP, Total cost = Fixed cost + Variable cost
\(Slope~of~sales~line =\frac{{Variable~Cost\;+\;Fixed~Cost}}{{Total~Sales~at~ BEP}}=\frac{{Variable~Expenses\;+\;Constant~Expenses}}{{Total~Sales}}\)
The difference between actual sales and breakeven point is known as
Answer (Detailed Solution Below)
Break Even Point Analysis Question 7 Detailed Solution
Download Solution PDFExplanation:
Margin of safety:
- The Margin of safety is the difference between the break-even point and output is produced.
- A large margin of safety indicates that the business can earn profit even if there is a great reduction in output.
- A small margin of safety indicates that the profit will be small even if there is a small drop in output.
Margin of safety (M/S) ratio is given by,
\({\rm{Margin\;of\;safety\;ratio}}\left( {\frac{{\rm{M}}}{{\rm{S}}}} \right) = \frac{{Margin\;of\;safety}}{{Present\;sale}} = \frac{{Sales - Break\;even\;point\;sales}}{{Present\;sale}}\)
Break-even point:
- It is the point of intersection of the total cost line and total revenue line.
- There is neither profit nor loss at the break-even point.
- At the break-even point, the margin of safety ratio is 0.
At the break-even point, Sales = break-even point sales
\({\rm{Margin\;of\;safety\;ratio\;}}\left( {\frac{{\rm{M}}}{{\rm{S}}}} \right) = \frac{{Sales - Break\;even\;point\;sales}}{{Present\;sale}} = 0\)
Additional Information
Break-even chart:
- The break-even analysis is the study of cost-volume-profit (CVP) relationship.
- It refers to a system of determining that level of operations where the organisation neither earns profit nor suffer any loss i.e where the total cost is equal to total sales i.e the point of zero profit (Break-even point).
- In a broader sense, it refers to a system of analysis that can be used to determine probable profit at any level of activity.
- The figure below shows the break-even chart.
Break-even analysis chart is drawn between
Answer (Detailed Solution Below)
Break Even Point Analysis Question 8 Detailed Solution
Download Solution PDFExplanation:
Break-even chart:
- The break-even analysis is the study of cost-volume-profit (CVP) relationship in which a graph is drawn between volume of production (Quantity) and income (Sales).
- It refers to a system of determining that level of operations where the organisation neither earns profit nor suffer any loss i.e where the total cost is equal to total sales i.e the point of zero profit (Break-even point).
- In a broader sense, it refers to a system of analysis that can be used to determine probable profit at any level of activity.
- The figure below shows the break-even chart.
The various point mentioned in the graph are:
Fixed cost:
- The cost which does not change for a given period (lifetime).
- This cost is independent of the volume of production (means it doesn’t affect by whether the production is large or small).
- For example, rent, taxes salaries of the supervisor, cost of the machine, insurance cost, etc.
Variable cost:
- This cost varies directly and proportionally with the output.
- Higher the output, larger the variable cost.
- For example, the cost of raw material, cost of labour, etc.
Total Cost:
- Total cost is the sum of fixed cost and variable cost.
Total revenue/sales:
- It indicates the return obtained by selling the number of units produced.
- It is directly proportional to the volume of production.
Margin of safety:
- The Margin of safety is the distance between the break-even point and output is produced.
- A large margin of safety indicates that the business can earn profit even if there is a great reduction in output.
- A small margin of safety indicates that the profit will be small even if there is a small drop in output.
Break-even point:
- It is the point of intersection of the total cost line and total revenue line.
- There is neither profit nor loss at the break-even point.
Fixed cost of an equipment is Rs. 6,000, if variable cost of an item it produces is Rs. 2 per item and sells it for Rs. 7 per item, what is the break-even point?
Answer (Detailed Solution Below)
Break Even Point Analysis Question 9 Detailed Solution
Download Solution PDFConcept:
\({\rm{Break\;even\;point}} = \frac{{Total\;fixed\;cost\;\left( {TFC} \right)}}{{Price\;per\;unit\;\left( P \right) - Variable\;cost\;\left( {V.C} \right)}}\)
Calculation:
Given:
TFC = Rs. 6000
P = Rs. 7
VC = Rs. 2 per item
\({\rm{Break\;even\;point}} = \frac{{6000}}{{7 - 2}}=1200\)
∴ Break-even point = 1200 itemsBreak-even point is not affected with the changes in which one of the following?
Answer (Detailed Solution Below)
Break Even Point Analysis Question 10 Detailed Solution
Download Solution PDFThe correct answer is Number of units sold
Key Points
The break-even point is the point at which total cost and total revenue are equal, meaning there is no loss or gain for your small business. In other words, you've reached the level of production at which the costs of production equal the revenues for a product.
To calculate your company's breakeven point, use the following formula:
Fixed Costs ÷ (Price - Variable Costs) = Breakeven Point in Units
The breakeven point (BEP) formula is determined by dividing the total fixed costs associated with production by the contribution per unit, i.e, Sale price per unit minus the variable costs per unit. In this case, fixed costs refer to those that do not change depending upon the number of units sold.
The data for break-even analysis of a product are given as-fixed cost is Rs. 10,000; variable cost is Rs. 10/unit; selling price is Rs. 15/unit. The break-even volume is
Answer (Detailed Solution Below)
Break Even Point Analysis Question 11 Detailed Solution
Download Solution PDFConcept:
Break-even analysis is a method used to determine the sales volume required for a company to “break-even”, or experience neither a profit nor a loss on the sale of its product.
The break-even represents the number of units that must be made and sold for income from sales to equal the cost of producing the product.
A breakeven analysis is used to determine how much sales volume your business needs to start making a profit, based on your fixed costs, variable costs, and selling price.
BEP in terms of physical unit:
\({\rm{BEP}} = {{\rm{X}}_{{\rm{BEP}}}} = \frac{{{\rm{Total\;Fixed\;cost}}}}{{{\rm{Contribution\;per\;unit}}}} = \frac{{\rm{F}}}{{{\rm{s}}\; -\; {\rm{v}}}}\)
where F is the fixed cost
s = sales price of one product, v = variable cost of one product
Calculation:
Given:
F = Rs. 10000, s = Rs. 15 and v = Rs. 10
Break-Even Quantity = \(\frac{F}{{s \;-\; v}}\)
\(\therefore BEP = \frac{F}{{s \;- \;v}} = \;\frac{{10000}}{{15 \;- \;10}} = 2000\;units.\)
For an organization producing a product, the fixed cost per month is Rs. 12000. The variable cost per product is Rs. 24. The unit selling price of the product is Rs. 48. To achieve break-even, the minimum production per month shall be
Answer (Detailed Solution Below)
Break Even Point Analysis Question 12 Detailed Solution
Download Solution PDFConcept:
If x number of units are produced in the system then
Total sale = sx
Fixed cost = F
variable cost = vx
and Profit = P,
where s is the sale cost per unit and v is the variable cost per unit
Total sale = Total cost + Profit
sx = F + vx + P
At break-even point, Profit (P) = 0
So, sx = F + vx
\(x = \frac{F}{{s - v}}\)
Calculation:
Given, F = 12,000 Rs., v = 24 Rs. and s = 48 Rs.
Then,
\(x = \frac{12000}{{48 - 24}}=500 \;units\)
Which one of the following condition is CORRECT at the break-even point?
Answer (Detailed Solution Below)
Break Even Point Analysis Question 13 Detailed Solution
Download Solution PDFExplanation:
- A breakeven analysis is used to determine how much sales volume your business needs to start making a profit, based on your fixed costs, variable costs, and selling price.
- Break-even point usually means the business volume that balances total costs with total gains. At break-even volume, in other words, total cash inflows equal total cash outflows. At Break-Even, in other words, the net cash flow equals zero.
- At BEP: Total cost = Sales revenue
Break-Even Point:
- It is the volume of production where total cost equal to total sale and an organisation neither earn profit nor suffer from loss
- It is also known as No Profit – No Loss point
\({\rm{Break\;Even\;Point}} = \frac{{{\rm{Total\;Fixed\;cost}}}}{{{\rm{Selling\;cost\;per\;unit}} - {\rm{Variable\;cost\;per\;unit}}}}\)
\({\rm{BEP}} = \frac{{\rm{F}}}{{{\rm{s}} - {\rm{v}}}}\)
- When sales revenue > total cost ⇒ There will be profit
- When sales revenue < total cost ⇒ There will be a loss
Breakeven point (BEP) indicates
Answer (Detailed Solution Below)
Break Even Point Analysis Question 14 Detailed Solution
Download Solution PDFExplanation:
Breakeven analysis is used to find the minimum level of production required. It evaluates both fixed and variable costs.
A breakeven analysis is used to determine how much sales volume your business needs to start making a profit, based on your fixed costs, variable costs, and selling price.
Break-even analysis consists of:
- Fixed cost (F)
- Variable cost (V)
- Sales revenue (S)
\(BEP = \left( {\frac{F}{{S - V}}} \right)\)
Break-even point is the point where total cost and sales revenue lines intersect.
Breakeven point (BEP) indicates recovery of both fixed cost and variable cost.
A toy manufacturing factory has annual capacity of toys. If the fixed are rupees 1 lakh/year, variable cost rupees 20 per unit and the selling price rupees 40 per unit, the quantity to break-even is units.
Answer (Detailed Solution Below)
Break Even Point Analysis Question 15 Detailed Solution
Download Solution PDFConcept:
\({\rm{Break\;even\;point}} = \frac{{Total\;fixed\;cost\;\left( {TFC} \right)}}{{Price\;per\;unit\;\left( P \right) - Variable\;cost\;\left( {V.C.} \right)}}\)
Calculation:
Given:
Total fixed cost (TFC) = 100000, P = 40, VC = 20.
\(Break~even ~point = {100000\over40-20} =5000\).
Hence, the quantity of break-even is 5000 units.