The Basic Break-Even Price Is

question 10

Multiple Choice

The basic break-even price is:

• A) Variable costs divided by selling price
• B) Fixed costs divided by selling price
• C) Fixed costs divided by contribution
• D) Contribution divided by variable costs

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Definitions:

Fixed Costs

Expenses that do not change in proportion to the level of production or sales activities, such as rent, salaries, and insurance premiums.

Net Income

The total profit of a company after all revenues, costs, and expenses have been deducted, often referred to as the bottom line.

Sales

The transactions involving the exchange of goods or services for money, constituting the primary revenue source for most businesses.

Variable Manufacturing Costs

Costs that vary directly with the level of production output, such as raw materials and direct labor costs.