Final answer:
The incorrect break-even equation is total contribution margin = total variable costs. The accurate equations are total contribution margin = total fixed costs, total fixed costs ÷ contribution margin ratio = break-even sales in dollars, and total revenue = total costs. Hence, option (A) is correct.
Step-by-step explanation:
The incorrect break-even equation from the options provided is: A. total contribution margin = total variable costs. The total contribution margin is actually the difference between total revenue and total variable costs, not equal to the total variable costs. Instead, the total contribution margin should cover the total fixed costs for a business to break even.
The correct break-even equations are B. Total contribution margin = total fixed costs, C. Total fixed costs ÷ contribution margin ratio = break-even sales in dollars, and D. Total revenue = total costs.
The calculation of marginal cost is typically the change in total cost divided by the change in quantity, providing insight into the cost for producing one additional unit of output. The distinction between different types of costs, such as average total cost, average variable cost, and marginal cost, is important as they provide different perspectives on cost behavior relative to the output level.