The Break-Even Point Is Where Total Sales Equal Total Fixed

question 167

True/False

The break-even point is where total sales equal total fixed costs.

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Definitions:

Flexible Budget

A flexible budget adjusts expenses based on changes in actual revenue or other activities, allowing for more accurate budgeting and variance analysis.

Variable Costs

Expenses that vary in direct proportion to changes in activity levels or volumes, such as raw materials and direct labor costs.

Fixed Costs

Costs that remain constant in total regardless of changes in the activity level within a relevant range.

Fixed Costs

Costs that do not vary with the level of output or sales in the short term, such as lease payments, insurance, and salaries of permanent staff.