Which of the following is NOT a correct definition of the break-even point?
A)the point where total sales equals total expenses.
B)the point where total profit equals total fixed expenses.
C)the point where total contribution margin equals total fixed expenses.
D)the point where total profit equals zero.

Question

Quizplus · Accepted Answer

The break-even point is the point where total revenue equals total expenses, not total profit equals total fixed expenses. The correct formula for the break-even point is total fixed expenses divided by contribution margin per unit, or total fixed expenses divided by contribution margin ratio.

Which of the Following Is NOT a Correct Definition of the Break-Even