What is the simple meaning of the break-even point?
Answer and explanation
Correct answer: Total income and total cost being equal
The break-even point is the level of sales or activity at which total revenue becomes equal to total cost. The business has recovered its costs, but it has not yet earned a profit, so the result is neither profit nor loss. Profit begins when revenue exceeds total cost, while a loss occurs when total cost is higher than revenue. Thus, option A gives the correct meaning.
Frequently asked questions
What is the correct answer to this question?
Total income and total cost being equal
Why is this the correct answer?
The break-even point is the level of sales or activity at which total revenue becomes equal to total cost. The business has recovered its costs, but it has not yet earned a profit, so the result is neither profit nor loss. Profit begins when revenue exceeds total cost, while a loss occurs when total cost is higher than revenue. Thus, option A gives the correct meaning.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Business, Trade and Commerce. Topic: Business Risk.
