Ten Short-Answer Questions

1. Name and describe two major behavior patterns. What if a cost has characteristics of both patterns?
2. What is meant by the term break-even point?
3. What are two ways in which the break-even point can be expressed?
4. What is the relevant range?
5. What is the formula for calculating the break-even point in sales revenue?
6. What formula is used to solve for the break-even point in units?
7. How can the break-even formula be altered to calculate the number of units that must be sold to achieve a desired level of income? Show the formula and explain.
8. Why might a business wish to lower its break-even point? How would it go about lowering the break-even point?
9. What effect would you expect the mechanization and automation of production processes to have on the break-even point?
10. Describe three ideas that can lower the break-even point and include a simple example with numbers.