COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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When expenses are exactly equal to your sales
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A business has sold exactly enough units to cover expenses
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There would neither be a profit nor a loss Net income would be zero
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All the answers above are correct
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None of the answers above are correct
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Detailed explanation-1: -The correct answer is ‘True. ‘ Break-even point is the point where revenues equal the total of all expenses including the cost of goods sold. If revenues minus all expenses (fixed and variable, and including cost of goods sold) equals zero, you are at the break-even point.
Detailed explanation-2: -Total profit at the break-even point is zero.
Detailed explanation-3: -Break-even point is that point where the producer is able to recover the total cost of production through sale of output and incurs no profit or loss. The total revenue here must equal the total cost for the firm to break-even at a given level of production of output.
Detailed explanation-4: -The breakeven point (BEP) formula is determined by dividing the total fixed costs associated with production by the contribution per unit, i.e, Sale price per unit minus the variable costs per unit.
Detailed explanation-5: -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.