Business Studies Multiple Choice Question – 26 December 2017

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

A business’s fixed costs are £10 000, selling price per unit is £4, and total variable costs per unit are £1.50. Which ONE of the following is the break-even level of output (to the nearest whole number)?

Select ONE answer only:

  1. 2 500 units
  2. 2 857 units
  3. 4 000 units
  4. 4 500 units
  5. 6 667 units

Show your workings to arrive at your answer, and explain and justify your reasons:

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

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

The answer is 3 – Break-even level of output = Fixed costs / Contribution per unit. Contribution per unit = Selling price per unit – Variable costs per unit. Therefore the breakeven level of output is: £10 000 / (£4 – £1.50) = £10 000 / £2.50 = 4 000 units.

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