The Breakeven Point Is

question 14

Multiple Choice

The breakeven point is:

• A) The sales volume at which revenues equal total cost plus an operating profit of zero.
• B) The sales volume at which revenues equal variable cost and profit is zero.
• C) The sales volume at which revenues equal fixed cost and profit is zero.
• D) The point at which revenues meet the budget target.
• E) The sales volume at which the total contribution margin exceeds total variable costs.

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Definitions:

Gross Sales

The total sales revenue of a company before any deductions for returns, allowances, or discounts.

Net Sales

The total revenue from sales after deducting returns, allowances for damaged or missing goods, and discounts.

Sales Discounts

Concessions granted by sellers to buyers as an incentive to encourage prompt payment, recorded as a deduction from revenue.

Sales Returns and Allowances

A reduction in sales revenue due to the return of or allowances for unsatisfactory goods.