ENTREPRENEURIAL OPERATIONS
PRODUCTION PLANNING AND CONTROL
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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In break even analysis, total cost consists of
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fixed cost + sales revenue
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variable cost + sales revenue
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fixed cost + variable cost
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fixed cost + variable cost + profit
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Explanation:
Detailed explanation-1: -The break-even point is calculated by dividing the total fixed costs of production by the price per individual unit less the variable costs of production. Fixed costs are costs that remain the same regardless of how many units are sold.
Detailed explanation-2: -The break-even analysis is important to business owners and managers in determining how many units (or revenues) are needed to cover fixed and variable expenses of the business. Therefore, the concept of break-even point is as follows: Profit when Revenue > Total Variable Cost + Total Fixed Cost.
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