Contribution and break-even analysis

Figure 1 shows a situation in which there is a change in the break-even point of a product from point M to point N.

The change in break-even point from M to N has been caused by:

The data below applies to Product X.

Fixed costs = £8000

Selling price = £10

Variable costs per unit = £6

Total contribution from current level of output = £10 000

Calculate the margin of safety for Product X at its current level of output.

Show your working.

Figure 1 shows a break-even chart.

Statement 1: ‘At 50 units of output, the distance between c and d shows the level of fixed costs.’

Statement 2: ‘At 50 units of output, the distance between c and e shows the total contribution.’

Read statements 1 and 2 and select the correct option from the following:

The diagram below shows a breakeven chart.

The business produces and sells 10 million units of output. Price rises from £5 to £9. As a result, profit changes:

The diagram below shows the original breakeven chart for a product.

The product’s fixed costs then decrease and its variable costs per unit increase such that, at its current output of 100 units, the total costs are still the same, as shown by point X.

Which one of these statements is correct?