At production levels below the breakeven point,
A)fixed costs are recovered.
B)profit is negative.
C)variable costs are zero.
D)fixed costs are zero.

Question

Quizplus · Accepted Answer

At production levels below the breakeven point, the total cost (fixed cost + variable cost) would be greater than the total revenue, resulting in a negative profit. Therefore, option B is the correct answer. Option A is incorrect because fixed costs are not recovered until the breakeven point is reached. Option C is incorrect because variable costs are never zero. Option D is incorrect because fixed costs are always present, regardless of the production level.

At Production Levels Below the Breakeven Point