What Is a Break-Even Analysis

question 11

Multiple Choice

What is a break-even analysis?

• A)The method of determining the point at which a company makes neither a profit or a loss
• B)A method of determining the point at which company has made its gross profit margin
• C)The method of determining the point at which a company makes its desired net profit
• D)None of these choices

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Definitions:

Sales Budget

One of the major elements of the income statement budget that indicates the quantity of estimated sales and the expected unit selling price.

Production Budget

A budget of estimated units to be manufactured to meet budgeted sales and desired inventory levels.

Capital Expenditures Budget

A plan for a company’s spending on fixed assets, such as equipment or property, that will be used over a long period.

Sales Budget

A sales budget is an estimate of the amount of revenue a company expects to generate from sales during a specific period.