Contribution Margin Is Equal to Fixed Costs at the Break-Even

question 77

True/False

Contribution margin is equal to fixed costs at the break-even point.At break-even point,profit,or contribution margin minus fixed costs,is zero,so contribution margin must equal fixed costs.

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Definitions:

Equivalent Units

A concept used in cost accounting to convert partially completed goods into a number of fully completed units for accounting purposes.

Labor

The human effort, either physical or mental, that is used in the production of goods and services.

Overhead

Indirect costs related to manufacturing or business operations that do not directly tie to a specific product or activity, such as utilities, rent, and management salaries.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, measured in terms of the amount of work done on them.