Understanding Break-Even Analysis

The break-even point is best described as the point where:

• (a) Total revenues exceed total costs, resulting in a profit.

• (b) Total costs exceed total revenues, resulting in a loss.

• (c) Total revenues are equal to total costs, indicating neither profit nor loss.

• (d) Variable costs are equal to fixed costs.

According to the information provided, the formula to find the break-even point in dinars is:

• (c) Break-Even Point (Units) × Selling Price

• (d) Fixed Costs / Selling Price

• (b) Selling Price / Break-Even Point (Units)

• (a) Break-Even Point (Units) + Selling Price

If a company's total revenues are higher than its total costs, this indicates that the company is:

• Maximizing expenses.

• PROFIT

• Minimizing profit

• Breaking even on investments.

Fixed costs are best described as:

• (a) Costs that vary with production levels.

• (c) Costs that are incurred only when production occurs.

• (b) Costs that remain constant regardless of production levels.

• (d) Costs that can be eliminated easily.

Variable costs change in relation to:

• (b) The fixed costs incurred.

• (d) The total revenue generated.

• (a) The number of units produced.

• (c) The selling price of the product.

The contribution margin is calculated as:

• (a) Selling Price - Variable Costs

• (c) Fixed Costs - Variable Costs

• (b) Total Revenue - Total Costs

• (d) Selling Price + Fixed Costs

To calculate the break-even point in units, you would use:

• (a) Fixed Costs / Contribution Margin per Unit.

• (d) Contribution Margin per Unit / Fixed Costs.

• (c) Variable Costs / Selling Price.

• (b) Total Revenue / Selling Price.