At the breakeven point:
A) Sales will be equal to variable costs plus target profit
B) Sales will be equal to variable costs plus fixed costs
C) Sales will be equal to fixed costs plus target profit
D) Fixed costs will be equal to variable costs

Question

Quizplus · Accepted Answer

At the breakeven point, the company's total revenue will be equal to its total costs. These costs include both fixed and variable costs. Therefore, the sales will be equal to variable costs plus fixed costs. Option A is incorrect because target profit is not included in the breakeven calculation. Option C is incorrect because fixed costs and target profit are both part of the total costs and are therefore included in the sales calculation. Option D is incorrect because fixed costs and variable costs are separate types of costs and cannot be equal to each other.

At the Breakeven Point