COST ACCOUNTING
COST VOLUME PROFIT ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following statements about determining the breakeven point is false?
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Revenues equal fixed costs plus variable costs
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Operating income is equal to zero
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Breakeven revenues equal fixed costs divided by the variable cost per unit
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Contribution margin-fixed costs is equal to zero
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Explanation:
Detailed explanation-1: -The answer is Option D. Break-even Revenues equals fixed cost divided by the variable cost per unit.
Detailed explanation-2: -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-3: -Total profit at the break-even point is zero.
Detailed explanation-4: -In accounting, the breakeven point is calculated by dividing the fixed costs of production by the price per unit minus the variable costs of production. The breakeven point is the level of production at which the costs of production equal the revenues for a product.
There is 1 question to complete.