Which of the Following Correctly Defined a Firm's Operating Break-Even

question 28

Multiple Choice

Which of the following correctly defined a firm's operating break-even?

• A)EBIT is equal to total sales.
• B)EBIT is equal to EBDITA less total fixed costs.
• C)EBIT is less than total sales less total variable costs.
• D)EBIT is equal total sales less total variable and fixed costs.

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Definitions:

Operations

The day-to-day activities involved in running a business, focusing on creating and delivering products or services.

Fixed Manufacturing Overhead

Expenses related to production that remain constant, regardless of the production volume, such as maintenance of machinery and property taxes.

Deferred

A term referring to items or expenses that are not recognized immediately but postponed to a future date.

Absorption Costing

This approach to accounting incorporates all costs associated with manufacturing such as direct materials, direct labor, and variable as well as fixed overhead expenses into the price of a product.