Which of the following statements is true of break-even point?
A) It cannot be used for control purposes in business organizations.
B) It can be reached by selling very few units if the fixed costs are high.
C) It is the point where the selling price minus variable cost exceeds the fixed costs of a unit.
D) It helps managers exercise control after the product has been created and is ready for marketing.

Question

Quizplus · Accepted Answer

The break-even point is the point where the selling price minus variable cost equals the fixed costs of a unit. It is a crucial tool for control purposes in business organizations, as it helps managers make decisions about pricing, production, and sales volume to ensure profitability. The break-even point is not determined by the number of units sold, but rather by the unit contribution margin (selling price minus variable costs) and the fixed costs. It is calculated by dividing the total fixed costs by the contribution margin per unit.

Which of the Following Statements Is True of Break-Even Point