Which of the Following Statements Is Correct About the Break-Even

question 20

Multiple Choice

Which of the following statements is correct about the break-even point?

• A)The break-even point is the point where a company achieves its target profit.
• B)The break-even point is the point where all variable costs are covered (but fixed costs are not).
• C)The break-even point is the point where all fixed costs are covered (but variable costs are not).
• D)The break-even point quantifies the number of units that must be sold to cover total costs with zero profit.

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Definitions:

Direct Labour Hour

A measure of labor directly involved in manufacturing or production, calculated by the amount of time workers spend on specific tasks.

Fixed Overhead

Costs that do not change with the level of production or sales activities, such as rent, salaries, and insurance.

Budget Variance

The difference between the budgeted or planned amounts and the actual amounts incurred.

Standard Cost

A predetermined cost of manufacturing a single unit or a number of product units during a specific period under normal conditions.