The Breakeven Formula Is

question 4

Multiple Choice

The breakeven formula is

• A) Total cost/price
• B) Total variable cost/(Price - average fixed cost)
• C) Total fixed cost/(Price - average variable cost)
• D) Total cost/(Price - average variable cost)

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Definitions:

Overhead Cost

Expenses related to the operation of a business that cannot be directly tied to a specific product or service, including costs like rent, utilities, and administrative salaries.

Predetermined Overhead Rate

An estimated rate used to allocate overhead costs to products or services, based on a selected activity base such as machine-hours or labor-hours.

Machine-Hours

A measure of production time using machinery, often used as a basis for allocating manufacturing overhead costs.

Unused Capacity

The available but unutilized production capability of a firm which could generate revenue if employed.