In a break-even problem, which costs are considered?
A) Fixed costs
B) Variable costs
C) Both fixed and variable costs
D) Neither fixed nor variable costs

Question

Quizplus · Accepted Answer

Both fixed and variable costs need to be considered in a break-even problem because they are both crucial in determining the minimum level of sales needed to cover all costs and break even. Fixed costs are the expenses that do not change regardless of the level of sales, while variable costs fluctuate based on the level of sales. Both fixed and variable costs need to be factored in to calculate the break-even point.

In a Break-Even Problem, Which Costs Are Considered