Question

The break-even point (BEP) can be computed using either:

a) Contribution margin per unit
b) Total fixed costs
c) Variable costs per unit
d) All of the above

Answer 1

The break-even point (BEP) can be computed using contribution margin per unit, total fixed costs, and variable costs per unit. The option (D) is correct.

Step-by-step explanation:

The break-even point (BEP) can be computed using a) Contribution margin per unit, b) Total fixed costs, and c) Variable costs per unit.

Contribution margin per unit is the selling price per unit minus the variable cost per unit. It represents the amount of revenue that goes towards covering the fixed costs and generating profit.

Total fixed costs are the costs that do not change regardless of the level of production. These costs need to be covered by revenue to reach the break-even point.

Variable costs per unit are the costs that change in direct proportion to the level of production. These costs need to be accounted for to determine the break-even point. Therefore, the correct answer is d) All of the above.