COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Where the lines for total revenue and total costs cross
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Where the lines for total revenue and fixed costs cross
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Where the lines for total costs and fixed costs cross
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Where the lines for fixed costs and variable costs cres..
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Detailed explanation-1: -The correct answer is option C) revenue line intersects the total cost line. The break-even point is the point where the total revenues are equivalent to the total costs of production, leaving nothing for profits or for for loss.
Detailed explanation-2: -To determine the break-even point graphically, the total cost curve of a product over time is plotted in a diagram. On the x-axis (horizontal axis) you plot the sales volume (how many products are sold) and on the y-axis (vertical axis) you plot the total cost of producing a given quantity of product.
Detailed explanation-3: -A firm’s break-even point occurs when at a point where total revenue equals total costs. Break-even analysis depends on the following variables: Selling Price per Unit:The amount of money charged to the customer for each unit of a product or service.
Detailed explanation-4: -The point where the total cost and revenue lines intersect is the break-even point. The amount of profit or loss at different output levels is represented by the distance between the total cost and total revenue lines.