ECONOMICS

Detailed explanation-1: -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.

Detailed explanation-2: -The break-even point is the point at which total cost and total revenue are equal, meaning there is no loss or gain for your small business. In other words, you’ve reached the level of production at which the costs of production equals the revenues for a product.

Detailed explanation-3: -Answer and Explanation: A) the point where total profit equals total fixed expenses. This is incorrect because, at the break-even point, the total contribution margin and the total fixed costs are equal.

Detailed explanation-4: -A firm’s break-even point occurs when at a point where total revenue equals total costs.

Detailed explanation-5: -To calculate the break-even point in units use the formula: Break-Even point (units) = Fixed Costs ÷ (Sales price per unit – Variable costs per unit) or in sales dollars using the formula: Break-Even point (sales dollars) = Fixed Costs ÷ Contribution Margin. Here’s What We’ll Cover: What Is the Break-Even Point?