The Break-Even Point Is That Level of Activity Where

question 42

Multiple Choice

The break-even point is that level of activity where:

• A) variable cost equals fixed cost.
• B) contribution margin equals fixed cost.
• C) total contribution margin equals the sum of variable cost plus fixed cost.
• D) sales revenue equals total variable cost.
• E) sales revenue equals fixed cost.

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Definitions:

Fixed Exchange-Rate System

An exchange rate regime where a country's currency value is pegged to another currency, a basket of currencies, or a commodity like gold.

Local Currency

The currency that is legally accepted within a country and typically used for all financial transactions within that geographical boundary.

Flexible Exchange Rates

A system where the value of a currency is determined by the foreign exchange market, depending on the supply and demand for that currency.

International Monetary Reserves

Assets that central banks and monetary authorities hold in foreign currencies, including foreign banknotes, bank deposits, bonds, treasury bills, and other government securities, to back its liabilities.