The breakeven point can be defined as:
A) The point at which sales equal variable costs
B) The point at which the total contribution margin equals the total fixed costs
C) The level of operations at which the firm earns a profit
D) The level of operations that equals budgeted sales

Question

Quizplus · Accepted Answer

The breakeven point is the level of operations at which the total contribution margin equals the total fixed costs. This means that all the costs have been covered and any sales made beyond this point contribute to the company's profits. A is incorrect because variable costs must be subtracted from sales to calculate contribution margin. C and D are both incorrect because they do not accurately reflect the definition of the breakeven point.

The Breakeven Point Can Be Defined As