Which of the following statements about determining the break-even point is FALSE?
A)Revenues equal fixed costs plus variable costs.
B)Break-even revenues equal fixed costs divided by the variable cost per unit.
C)Contribution margin - fixed costs is equal to zero.
D)Operating profit is equal to zero.

Question

Quizplus · Accepted Answer

The formula for calculating the break-even point is: Break-even point = Fixed costs ÷ (Price - Variable costs per unit). Therefore, break-even revenues equal fixed costs divided by the contribution margin per unit (price minus variable cost per unit), not just the variable cost per unit as stated in option B.

Which of the Following Statements About Determining the Break-Even Point