Question

At the break-even point:

A. Sales would be equal to total costs.
B. Both sales would be equal to total costs and contribution margin would be equal to total fixed costs are correct.
C. Sales would be equal to fixed costs.
D. Contribution margin would be equal to total fixed costsã

Answer 1

D. Contribution margin would be equal to total fixed costs

Step-by-step explanation:

As we know that

break even point is the point at which the firm is earning no profit or no loss suffered

In equation, it is

Total cost = Total revenues

In addition,

The contribution margin = Sales - variable expenses

Therefore

The contribution margin = Fixed cost = break even point

If we subtract the contribution margin from the fixed cost the amount should be zero which implies the break even point