Which of the following statements is correct about the break-even point?
A)The break-even point is the point where a company achieves its target profit.
B)The break-even point is the point where all variable costs are covered (but fixed costs are not).
C)The break-even point is the point where all fixed costs are covered (but variable costs are not).
D)The break-even point quantifies the number of units that must be sold to cover total costs with zero profit.

Question

Quizplus · Accepted Answer

The break-even point is the point where total revenue equals total costs, meaning there is zero profit. This point is reached when the number of units sold covers both variable and fixed costs. Therefore, the correct statement is that the break-even point quantifies the number of units that must be sold to cover total costs with zero profit, which is option D.

Which of the Following Statements Is Correct About the Break-Even