The break-even point is the activity level where:
A)revenues equal fixed costs.
B)contribution margin equals variable costs.
C)revenues equal the sum of variable and fixed costs.
D)revenues equal variable costs.

Question

Quizplus · Accepted Answer

The break-even point is the activity level at which the total revenue earned equals the total costs incurred. These costs include both variable and fixed costs. Therefore, the correct answer is C, where revenues equal the sum of variable and fixed costs. Choices A and D are incorrect because they only consider fixed or variable costs, respectively. Choice B is incorrect because the contribution margin only represents the amount of revenue remaining after variable costs are deducted, and does not include fixed costs.

The Break-Even Point Is the Activity Level Where