Which of the following is true concerning break-even analysis? As variable costs

ID: 2522113 • Letter: W

Question

Which of the following is true concerning break-even analysis?

As variable costs increase, the volume needed to break-even goes down.

As fixed costs decrease, the volume needed to break-even goes up.

Sales price has no impact on break-even volume.

At break-even volume, total costs = total revenues

As variable costs increase, the volume needed to break-even goes down.

As fixed costs decrease, the volume needed to break-even goes up.

Sales price has no impact on break-even volume.

At break-even volume, total costs = total revenues

The correct answer is D. At break-even volume, total costs = total revenues

This means that at the Break Even Point, there is no profit and no loss.

Notes:

1. If the variable costs increases,

Break Even point = Fixed Cost / (Selling Price Per Unit - Variable Cost Per Unit)

This means the break even will go up with an increase in the variable costs

2. If the Fixed Cost decreases, the olume needed to break-even would go down.

3. Sales price has an impact on break-even volume.

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