Question

One factor in determining the selling price of a product is to determine the point at which total costs would be equal to total revenues (no profit, no loss). Any sales volume above this point would result in profits and sales below this point would result in losses. This point is known as the: ________

a. profit point
b. point of diminishing returns
c. point of increasing returns
d. break-even point

Answer 1

The point at which total cost would be equal to total revenue is known as the break-even point.

What is the breakeven point?

The breakeven point is the number of  units produced and sold at which net income is zero. At the breakeven point, the firm neither earns a profit or a loss.

Breakeven point = fixed cost / price – variable cost per unit

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