The Accounting Break-Even Point Is That Level of Sales Where

question 27

Multiple Choice

The accounting break-even point is that level of sales where:

• A) sales revenue equals variable costs.
• B) sales revenue equals variable plus fixed costs.
• C) EBIT equals depreciation expense, thus cash flow equals zero.
• D) EBIT equals zero.

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Definitions:

Amount of Profit

The financial gain made in a transaction or operation, calculated as total revenues minus total costs.

Vertical Axis

The y-axis in a graph or chart, which typically represents the dependent variable in a data set.

Total Cost Curve

A graph that depicts how the total costs of production vary with the level of output.

Economic Profit

A measure of performance that captures the surplus generated from business activities after accounting for both explicit and implicit costs.