Which of the following is correct? The break-even point occurs on the Cost-Volume-Profit graph where:
A) total profit equals total expenses.
B) total profit equals total fixed expenses.
C) total contribution margin equals total fixed expenses.
D) total variable expenses equal total contribution margin.

Question

Quizplus · Accepted Answer

The break-even point is the point at which total revenue equals total expenses, and any sales above this point generate a profit. In the Cost-Volume-Profit graph, the total contribution margin is the difference between total revenue and total variable expenses. Therefore, when total contribution margin equals total fixed expenses, the break-even point is reached as all expenses are covered by revenue and no profit or loss is incurred.

Which of the Following Is Correct? the Break-Even Point Occurs