The Break-Even Point on the Cost-Volume-Profit Graph Is Where the ________

question 6

Multiple Choice

The break-even point on the cost-volume-profit graph is where the ________.

• A) total cost line intersects the net profit line
• B) total cost line intersects the net loss line
• C) revenue line intersects the total cost line
• D) revenue line intersects the variable cost line

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Definitions:

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials or commission on sales.

Fixed Expenses

Costs that do not change with the level of production or business activity.

Unit Contribution Margin

The amount by which the selling price of a unit exceeds its variable costs, indicating how much it contributes to covering fixed costs and generating profit.

Fixed Expenses

Expenses that remain constant regardless of production or sales volume, including rent, salaries, and insurance.