Question

Which of the following is true at break even point?

• A. $Profit=$ fixed cost $+$ variable cost
• B. Sales Revenue $=$ Variable cost
• C. Sales Revenue $=$ Total cost $-$ variable cost
• D. Contribution $=$ Fixed cost

Answer 1

Answer: (D)

Contribution $=$ Fixed cost

The break-even point (BEP) or break-even level represents the sales amount—in either unit (quantity) or revenue (sales) terms—that is required to cover total costs, consisting of both fixed and variable costs to the company. Total profit at the break-even point is zero.