Question

The break-even point is the sales level at which a company_______________.a. incurs a loss. b. contribution margin equals fixed costs. c. has a profit equal to fixed costs.d. contribution margin equals variable costs.e. has a profit of $0.

Answer 1

Answer:

b. contribution margin equals fixed costs

e. has a profit of $0.

Explanation:

The break even point is the point in which the firm has no profit and no loss situation. When it meets we called as break even point.

So, the break even point is the point at which the profit is zero plus the contribution margin equals to the fixed cost i.e means

Contribution margin = Fixed cost

Sales - variable cost = Fixed cost

If both are equal so it seems the profit is zero