CAIE A-Level Business 5.4.4 Break-even Analysis

Practise calculating and interpreting contribution, break-even output, margin of safety and profit from figures or graphs and evaluating the technique's business usefulness and…

Syllabus
2026–2028
Objective
5.4.4
Level
—

Exam points

  • calculate unit contribution as selling price minus variable cost and break-even as fixed cost ÷ contribution
  • calculate margin of safety as actual or forecast output minus break-even output and interpret risk
  • evaluate break-even using demand uncertainty, changing costs, product mix and qualitative factors

Question 3

Question 3(a)

(a)

Define the term break-even analysis.

[ 2 ]

Question 3(b)

(b)

Explain one limitation for a business of break-even analysis.

[ 3 ]