At the break-even point:
A) Sales would be equal to total costs.
B) Contribution margin would be equal to total fixed costs.
C) Sales would be equal to fixed costs.
D) Both sales would be equal to total costs and contribution margin would be equal to total fixed costs are correct.

Question

Quizplus · Accepted Answer

At the break-even point, the company is neither earning a profit nor incurring a loss. This means that the sales revenue generated by the company is enough to cover its total costs - which include both fixed and variable costs. Therefore, option A is correct - sales would be equal to total costs. Additionally, since the contribution margin is the difference between sales revenue and variable costs, at the break-even point, the contribution margin would be just enough to cover the fixed costs. Hence, option B is also correct - contribution margin would be equal to total fixed costs.

At the Break-Even Point