Question

In break-even analysis, what is the break-even point? A. the quantity where revenue equals variable cost B. the quantity beyond which the firm starts to lose money C. the quantity where variable cost equals fixed cost D. the quantity where revenue equals fixed cost E. the quantity where revenue equals total cost

Answer 1

Answer: Option E

Explanation: In simple words, break even point refers to that level of production and sales at which the total cost incurred and the revenue earned by a firm is equal. In other words, it can be understood as no profit no loss situation.

It is computed by dividing the contribution proportion in the sales from the fixed cost that are to be incurred.

Hence from the above we can conclude that the correct option is E.