Which of the following statements about break-even analysis is true?
A) It is used to determine how much production experience a company must have to achieve desired efficiencies.
B) It is a technique used to calculate fixed costs.
C) It determines the amount of retained earnings a company will have during an accounting period.
D) It is a technique marketers use to examine the relationship between supply and demand.
E) It is calculated using variable costs, the unit price, and fixed costs.

Question

Quizplus · Accepted Answer

Break-even analysis is used to determine the level of sales a company needs to cover all its expenses, so that there is neither a profit nor a loss. To calculate the break-even point, we need to consider variable costs, unit price, and fixed costs. Therefore, option E is the correct statement.

Which of the Following Statements About Break-Even Analysis Is True