Question

The break-even point is that level of activity where: Multiple Choice a) total revenue equals total cost. b) variable cost equals fixed cost. c) total contribution margin equals the sum of variable cost plus fixed cost. d) sales revenue equals total variable cost. e) profit is greater than zero.

Answer 1

Answer:

a) total revenue equals total cost.

Explanation:

The break-even point is the level of activity in which total revenue equals total cost. It can also be defined in terms of  units sold for a year is as the fixed expenses for the year divided by the contribution margin per unit of product. Note that exactly at the break-even point, there is no profit or loss.

Therefore, the answer is alternative a).