Which of the following statements is true regarding cost-volume-profit analysis?
Which of the following statements is true regarding cost-volume-profit analysis?
Breakeven occurs when the contribution margin covers fixed costs. This means that the revenue from sales exactly meets the combined amount of variable and fixed costs, resulting in neither profit nor loss. The contribution margin is the amount of sales revenue remaining after deducting variable costs, which is then used to cover fixed costs. Therefore, the correct statement with regard to cost-volume-profit analysis is that breakeven occurs when the contribution margin covers fixed costs.
THE ANSWER IS C LOTS OF ERROR ABOUT THIS TOPIC
as per the link - the correct definition is "The contribution margin represents sales revenue left over after deducting variable costs from sales. It is the amount remaining that will contribute to covering fixed costs and to operating profit (hence, the name contribution margin)." Pls correct the answer.
Please correct this. It should be C