COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the cost of making one unit of output
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costs that do not vary with the level of output
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costs that vary with the level of output
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total costs
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Detailed explanation-1: -Fixed costs do not vary with the production level. Total fixed costs remain the same, within the relevant range. However, the fixed cost per unit decreases as production increases, because the same fixed costs are spread over more units.
Detailed explanation-2: -Fixed costs remain the same regardless of production output.
Detailed explanation-3: -Fixed cost is one of the components of the total cost that a firm or business incurs to produce a specific level of output for the market. Generally, this cost is incurred at the starting of the business and does not change as the level of output changes.
Detailed explanation-4: -Variable costs are costs that change as the volume changes. Examples of variable costs are raw materials, piece-rate labor, production supplies, commissions, delivery costs, packaging supplies, and credit card fees.