Question

Which of the following statements is true of break-even point?

A) It cannot be used for control purposes in business organizations.


B) It can be reached by selling very few units if the fixed costs are high.


C) It is calculated as the ratio of the total fixed costs to the contribution margin of a unit.


D) It helps managers exercise control after the product has been created and is ready for marketing.

Answer 1

D) It helps managers exercise control after the product has been created and is ready for marketing.

Step-by-step explanation:

Break-even point is the point where the total cost matches the total revenue,it is helpful to managers in order to control the business,it helps them to know when to implement certain changes or favorable incentives for improved sales and overall revenue.

It is calculated by dividing the total fixed cost/total revenue for one unit minus the variable cost for one unit.

It helps managers to control the profit margins in a given product,and also know the impact of changes to total revenue or profit when a process is Automated.