Select the incorrect break-even equation from the following:
A) Total contribution margin = total variable costs
B) Total contribution margin = total fixed costs
C) Total fixed costs ÷ contribution margin ratio = break-even sales in dollars
D) Total revenue = total costs

Question

Quizplus · Accepted Answer

The correct break-even equation is not "Total contribution margin = total variable costs." Break-even occurs when total revenue equals total costs, which includes both variable and fixed costs. The contribution margin is used to cover fixed costs at the break-even point, not equal to the variable costs.

Select the Incorrect Break-Even Equation from the Following