At the break-even point,
Acontribution equals variable cost
Bfixed cost equals variable cost
Csales revenue equals variable cost
Dtotal cost equals total sales revenue
Answer & Solution
Correct answer: D. total cost equals total sales revenue
1. Break-even is the level of production and sales at which there is no profit and no loss.
2. That happens exactly when total cost equals total sales revenue.
3. Equivalently, total contribution equals total fixed cost.
4. Contribution equalling variable cost is a different and coincidental condition.
_Source: ICAI Cost and Management Accounting Ch14 'Marginal Costing', section 14.7.3_
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