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2. Why do firms use break even analysis

  • to measure a loss over a period of time
  • to calculate in advance the level of output needed to break even
  • to measure profit

3. What is break even

  • when total costs are higher than total total revenue
  • when total revenue is equal to total costs
  • when total revenue is higher than total costs

4. Which one of these is an example of a variable cost

  • Raw materials
  • Rent
  • employees salary

5. What is a margin of safety

  • the amount by which sales can fall from their current level before reaching the break-even point
  • A margin used to keep profit safe
  • where sales can increase from their current level

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