Which of the Following Is the Formula for Calculating Breakeven

question 34

Multiple Choice

Which of the following is the formula for calculating breakeven point?

• A) Fixed Costs/(Price - Variable Costs)
• B) Fixed Costs - Variable Cost/Price
• C) (Fixed Costs/Variable Costs) - Price
• D) (Fixed Costs/Price) - Variable Costs
• E) Fixed Cost - (Price + Variable Costs)

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Definitions:

Break-even Points

The level of production or sales at which total revenues equal total expenses, resulting in no net profit or loss.

Common Fixed Expenses

These are fixed costs that do not vary with the volume of production or sales, such as utilities, rent, or administrative salaries, shared across different products or departments.

Variable Costing

An accounting method that considers only variable costs as product costs and treats fixed costs as period costs to be charged in full against the current period's revenue.

Direct Labor Cost

The expense associated with employees who are directly involved in the production process.