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Consider the following statements in respect of break-even point:
1. Revenue is equal to total cost.
2. Revenue is equal to variable cost.
3. Profit/Loss is equal to zero.
Which of these statements is/are correct?
1. Revenue is equal to total cost.
2. Revenue is equal to variable cost.
3. Profit/Loss is equal to zero.
Which of these statements is/are correct?
- a)1, 2 and 3
- b)1 and 2 only
- c)2 and 3 only
- d)1 and 3 only
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
Consider the following statements in respect of break-even point:1. Re...
The correct answer is option 'D', which states that statements 1 and 3 are correct. Let's discuss each statement in detail:
1. Revenue is equal to total cost:
The break-even point is the point at which a company's total revenue equals its total cost, resulting in zero profit or loss. This means that all costs, including both fixed costs and variable costs, are covered by the revenue generated. At the break-even point, the company is neither making a profit nor incurring a loss. Therefore, statement 1 is correct.
2. Revenue is equal to variable cost:
This statement is incorrect. Revenue is not equal to variable cost at the break-even point. Variable costs are costs that vary with the level of production or sales, such as raw materials, direct labor, and variable overhead. On the other hand, revenue is the income generated from the sale of products or services. The break-even point occurs when the total revenue covers both fixed costs and variable costs, not just variable costs.
3. Profit/Loss is equal to zero:
At the break-even point, the company's profit or loss is equal to zero. This means that the total revenue generated is exactly equal to the total costs incurred. Any revenue generated beyond the break-even point will result in a profit, while any revenue generated below the break-even point will result in a loss. Therefore, statement 3 is correct.
In summary, the correct statements regarding the break-even point are that revenue is equal to total cost (statement 1) and profit/loss is equal to zero (statement 3). Statement 2, which states that revenue is equal to variable cost, is incorrect.
1. Revenue is equal to total cost:
The break-even point is the point at which a company's total revenue equals its total cost, resulting in zero profit or loss. This means that all costs, including both fixed costs and variable costs, are covered by the revenue generated. At the break-even point, the company is neither making a profit nor incurring a loss. Therefore, statement 1 is correct.
2. Revenue is equal to variable cost:
This statement is incorrect. Revenue is not equal to variable cost at the break-even point. Variable costs are costs that vary with the level of production or sales, such as raw materials, direct labor, and variable overhead. On the other hand, revenue is the income generated from the sale of products or services. The break-even point occurs when the total revenue covers both fixed costs and variable costs, not just variable costs.
3. Profit/Loss is equal to zero:
At the break-even point, the company's profit or loss is equal to zero. This means that the total revenue generated is exactly equal to the total costs incurred. Any revenue generated beyond the break-even point will result in a profit, while any revenue generated below the break-even point will result in a loss. Therefore, statement 3 is correct.
In summary, the correct statements regarding the break-even point are that revenue is equal to total cost (statement 1) and profit/loss is equal to zero (statement 3). Statement 2, which states that revenue is equal to variable cost, is incorrect.
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Consider the following statements in respect of break-even point:1. Revenue is equal to total cost.2. Revenue is equal to variable cost.3. Profit/Loss is equal to zero.Which of these statements is/are correct?a)1, 2 and 3b)1 and 2 onlyc)2 and 3 onlyd)1 and 3 onlyCorrect answer is option 'D'. Can you explain this answer?
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Consider the following statements in respect of break-even point:1. Revenue is equal to total cost.2. Revenue is equal to variable cost.3. Profit/Loss is equal to zero.Which of these statements is/are correct?a)1, 2 and 3b)1 and 2 onlyc)2 and 3 onlyd)1 and 3 onlyCorrect answer is option 'D'. Can you explain this answer? for Mechanical Engineering 2025 is part of Mechanical Engineering preparation. The Question and answers have been prepared according to the Mechanical Engineering exam syllabus. Information about Consider the following statements in respect of break-even point:1. Revenue is equal to total cost.2. Revenue is equal to variable cost.3. Profit/Loss is equal to zero.Which of these statements is/are correct?a)1, 2 and 3b)1 and 2 onlyc)2 and 3 onlyd)1 and 3 onlyCorrect answer is option 'D'. Can you explain this answer? covers all topics & solutions for Mechanical Engineering 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements in respect of break-even point:1. Revenue is equal to total cost.2. Revenue is equal to variable cost.3. Profit/Loss is equal to zero.Which of these statements is/are correct?a)1, 2 and 3b)1 and 2 onlyc)2 and 3 onlyd)1 and 3 onlyCorrect answer is option 'D'. Can you explain this answer?.
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