Business Studies Multiple Choice Question – 25 December 2017

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Business Studies

Which ONE of the following is the correct definition of margin of safety?

Select ONE answer only:

  1. The amount by which total revenue has to grow before it passes the break-even of output.
  2. The amount by which total revenue can fall before a business is unable to cover its total fixed costs.
  3. The amount by which output can fall before a business reaches its break-even level of output.
  4. The amount by which the total revenue of a business exceeds its total costs.
  5. The amount by which a business’s actual output exceeds its planned level of output

What is the importance of measuring the break-even point to businesses?

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This is multiple choice question is suitable for Business Studies KS4 classes.

The answer is 3 – The margin of safety is the difference between the level of output a business plans to achieve, or has actually achieved (ie number of items produced or sold, or number of customers served, as opposed to revenue generated), and the business’s breaks even level of output, which is the point at which a business covers its total costs (ie fixed and variable costs).

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor

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