At the break-even point,
A) total revenue equals variable cost.
B) total fixed cost equals variable cost.
C) total contribution margin equals total fixed cost.
D) total sales equals total fixed cost.
E) total margin of safety equals variable cost.

Question

Quizplus · Accepted Answer

The break-even point is the level of sales at which total revenue equals total costs. At this point, there is no profit or loss. Total costs consist of fixed costs plus variable costs. The contribution margin is the amount by which sales revenue exceeds variable costs. Therefore, at the break-even point, the contribution margin must equal the fixed costs. Hence, choice C is the correct answer.

At the Break-Even Point