In a Cost-Volume-Profit Graph the Break-Even Point Will Be Found

question 5

Multiple Choice

In a cost-volume-profit graph the break-even point will be found:

• A)Where the predetermined overhead rate equals the contribution margin rate
• B)At the point where total income equals total fixed costs
• C)At the point where total income equals total fixed plus total variable costs
• D)Where the total income line crosses the fixed costs line

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Definitions:

Economic Profits

Profits calculated by subtracting both the explicit and implicit costs of production from total revenues.

Monopolistically Competitive

Describes a market type where numerous sellers offer differentiated products, leading to competitive yet non-homogeneous markets.

Equilibrium

A condition where the supply and demand in the market are equal, leading to steady prices and amounts.

AVC

Average Variable Cost, which calculates the variable costs per unit of output, encompassing costs that change with the level of output.