Point where income is equal to the total of the fixed costs and variable cost of doing business is known as

• A. Break-even Analysis
• B. Cash Flow
• C. Net Worth
• D. None of the Above

Answer: (A)

Break-even point is the sales level where income equals the total costs, which are fixed costs plus variable costs. Fixed costs stay the same regardless of production, while variable costs rise with output. At break-even, revenue just covers all costs, so profit is zero; any sales beyond that generate profit. This concept helps determine how much must be sold to cover costs and informs pricing and cost management. For example, if fixed costs are $50,000 and the contribution margin per unit (price minus variable cost per unit) is $5, you need 10,000 units to break even. The other terms describe different financial ideas: cash flow relates to timing of cash in and out, net worth is assets minus liabilities, and none of the above would not apply since break-even is the correct term.