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CIPS L6M9 Exam - Topic 1 Question 18 Discussion
Topic #: 1
Greg is the manager at a car wash and is trying to work out the break-even point of his business. Which of the following pieces of information will he need to consider to understand his break-even point? Select ALL that apply.
Greg needs to know his fixed costs, variable costs, and price per car wash to determine his break-even point.
For example, if:
Fixed costs (rent, bills) = 100/day
Variable cost per car wash (soap, sponges) = 5
Price per car wash = 10
The break-even point is when revenue = costs, which means washing 20 cars per day (10 20 = 200 revenue, covering fixed and variable costs).
Number of customers (C) is incorrect, as this is calculated from the break-even formula, not an input.
Number of employees (E) is incorrect, as it is not a direct factor in the break-even calculation (only their wages as part of fixed costs).
(LO 1.3)
William
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