The Volume That Results in Total Revenue Being Equal to Total

question 29

Multiple Choice

The volume that results in total revenue being equal to total cost is known as the

• A)breakeven point.
• B)marginal volume.
• C)marginal cost.
• D)profit mix.

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Definitions:

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit, indicating how much each unit contributes to covering fixed costs.

Fixed Costs

Costs that do not vary with the volume of production or sales, such as rent, salaries, and insurance.

Contribution Margin Ratio

A financial metric that shows the portion of sales revenue that is not consumed by variable costs and therefore contributes to covering fixed costs.

Operating Income

Operating income is the profit earned from a firm's normal business operations, excluding deductions of interest and taxes.