The Sales Level at Which a Company Neither Earns a Profit

question 228

Multiple Choice

The sales level at which a company neither earns a profit nor incurs a loss is the:

• A) Relevant range.
• B) Break-even point.
• C) Margin of safety.
• D) Contribution margin.
• E) Step-wise variable level.

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Definitions:

Financial Liability

An obligation to transfer cash or other resources as a result of past transactions or events.

Contractual Obligation

A contractual obligation is a duty or responsibility that one party is legally bound to perform under a contract agreement with another party.

Cash Consideration

Payment made in cash during a transaction, as opposed to stock exchange or other non-cash assets.

Amortised Cost

A financial valuation technique that gradually writes off the initial cost of an asset over a period, or the method of allocating the cost of an intangible asset over its useful life.