The break-even point is
A)the volume of activity where all fixed costs are recovered.
B)where fixed costs equal total variable costs.
C)where total revenues equal total costs.
D)where total costs equal total contribution margin.

Question

Quizplus · Accepted Answer

The break-even point is where total revenues equal total costs, meaning that the business has neither made a profit nor suffered a loss. Option A is a partial definition since fixed costs are only part of the break-even equation. Option B is incorrect since it only considers variable costs and does not take into account fixed costs. Option D is incorrect since it only considers contribution margin and does not factor in total costs.

The Break-Even Point Is