COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The output at which revenue is greater than costs.
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The output at which revenue is equal to costs.
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The output at which revenue is less than costs.
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The output at which costs is greater than revenue.
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Detailed explanation-1: -What is a breakeven point? A breakeven point is used in multiple areas of business and finance. In accounting terms, it refers to the production level at which total production revenue equals total production costs. In investing, the breakeven point is the point at which the original cost equals the market price.
Detailed explanation-2: -Break-even is the point at which revenue and total costs are the same, meaning the business is making neither a profit nor a loss. The break-even level of output informs a business of how many products it needs to sell to reach the break-even point (BEP).
Detailed explanation-3: -The break-even point (BEP) in economics, business-and specifically cost accounting-is the point at which total cost and total revenue are equal, i.e. “even". There is no net loss or gain, and one has “broken even", though opportunity costs have been paid and capital has received the risk-adjusted, expected return.
Detailed explanation-4: -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.