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

question 9

Multiple Choice

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

• A) where the total income line crosses the fixed costs line.
• 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 predetermined overhead rate equals the contribution margin rate.

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Definitions:

Substitution

The economic principle of replacing one input or good for another due to changes in prices or preferences.

Indifference Curve

A graph representing different combinations of goods or services among which a consumer is indifferent, showing preference levels.

Utility Function

A mathematical representation of a consumer’s preference, showing the amount of satisfaction or utility derived from consuming various bundles of goods and services.

Perfect Complements

Pair of goods that are consumed together in fixed proportions because the consumption of one good enhances the consumption of the other.