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What is the break-even point in CVP analysis?
What is the break-even point in CVP analysis?
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Practice Questions
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Q1
What is the break-even point in CVP analysis?
The point where total revenue equals total costs
The point where fixed costs are covered
The point where variable costs exceed fixed costs
The point where profit is maximized
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The break-even point is where total revenue equals total costs, resulting in neither profit nor loss.
Questions & Step-by-step Solutions
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Q
Q: What is the break-even point in CVP analysis?
Solution:
The break-even point is where total revenue equals total costs, resulting in neither profit nor loss.
Steps: 5
Show Steps
Step 1: Understand that the break-even point is a financial term.
Step 2: Know that it is the point where a business's total revenue is equal to its total costs.
Step 3: Realize that at this point, the business is not making a profit or a loss.
Step 4: Remember that to find the break-even point, you need to calculate fixed costs and variable costs.
Step 5: Use the formula: Break-even point (in units) = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit).
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