Practicing Success
Practicing Success
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| Which of the following is correct about break even point? |
A breakeven point is the level of sales (or revenue generated) that equals all the expenses required for generating that revenue and a bare minimum profit required for survival. It is not more than the expenses (i.e. no profit) nor is it less than the expenses (i.e. no loss). In other words there is neither loss nor profit. A breakeven point is the level of sales (or revenue generated) that equals all the expenses required for generating that revenue and an expected profit calculated by the management. A breakeven point is the level of sales (or revenue generated) that equals all the expenses required for generating that revenue and a small amount of loss which will not affect the continuity of a business in long run. |
| It is not more than the expenses (i.e. no profit) nor is it less than the expenses (i.e. no loss). In other words there is neither loss nor profit. |
| A breakeven point is the level of sales (or revenue generated) that equals all the expenses required for generating that revenue. It is not more than the expenses (i.e. no profit) nor is it less than the expenses (i.e. no loss). In other words there is neither loss nor profit. At the breakeven level Total revenue = Total expenses (Qty x Unit Price) = (Qty x Unit Cost) + Fixed Exp Qty x (Unit Price – Unit Cost) = Fixed Exp Qty x Gross Margin (or Profit) per Unit = Fixed Exp |
