CAIE IGCSE Business Studies 7.2.6 break-even output

Practise break-even-output questions by finding contribution and dividing fixed costs by contribution with clear working.

Exam points

Calculate contribution per unit as selling price minus variable cost per unit.
Divide fixed costs by contribution to find the break-even output or customers.
Use appendix data carefully and show working for method marks when the answer is wrong.

[Maximum number: 2]

Calculate the break-even level of output for BW using the information in Appendix 2.

Two marks for a correct calculation. One mark for the correct method/formula but a wrong answer.

$\text{Break-even output}=\frac{\text{Fixed costs}}{\text{Price}-\text{Variable cost per unit}}$ $=\frac{\$1250}{\$11-\$1}=125$

Note: If the answer is only 125 with no working, award two marks.

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7.2.6—Break-even output question 1