CLASSWORK

SECONDARY 4
SUBJECT : IGCSE BUSINESS STUDIES
TOPIC : BREAK-EVEN POINT (BEP)
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Day: Thursday Date: 1 September 2022 Duration: 1hr

Name: _________________________ Mark: _______ /20

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Sibon plc manufactures soft toys for the European market. The costs incurred by the firm are
as follows:

Materials (per toy) 5

Wages (per toy) 4

Packaging (per toy) 3

Rent of premises 5,000

Machinery hire 3,000

Marketing and 1,000

administration

The soft toys sell for an average price of $16. Current capacity of Sibon plc is 3000 toys per
year.

Question [20 marks]

1. Calculate the following:
a. Contribution per toy sold [3]
b. Break-even in units of output [3]
c. Break-even level of sales revenue [3]
2. Construct a break-even chart showing the break-even level of output [8]
3. Identify the margin of safety [3]

Fully label the chart.