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Which of the following is not true of the break-even point?

a. it represents the point where a firm's profits is equal to zero.
b. it represents the point where a firm's revenue is equal total costs
c. it represents the number of units required to cover both variable and fix costs.
d. it represents the number of units required to be produced to meet the annual profit goal.
e. it represents the point where the sales revenue equals the total costs of a product.

1 Answer

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Final answer:

The statement not true of the break-even point is d. it represents the number of units required to be produced to meet the annual profit goal. The break-even point concerns reaching a state where a firm's total revenues equal its total costs, resulting in zero profits.

Step-by-step explanation:

Among the options provided, the statement that is not true of the break-even point is d. it represents the number of units required to be produced to meet the annual profit goal. The break-even point is a concept in economics and business that represents the level of output where a firm's revenues exactly cover its total costs, hence the firm earns zero profits. This means:

  • a. it represents the point where a firm's profits are equal to zero.
  • b. it represents the point where a firm's revenue is equal to total costs.
  • c. it represents the number of units required to cover both variable and fixed costs.
  • e. it represents the point where the sales revenue equals the total costs of a product.

Option d is not correct because the break-even point does not concern itself with profit goals but rather with the point at which the company is not making a loss nor a profit.

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