True or False? The break-even point is the point at which the level of sales is equal to a foodservice's combined variable and fixed costs.

Question

BlackTom AI · Accepted Answer

The question asks whether the break-even point is where sales equal a foodservice's combined variable and fixed costs.
Option 1: True. This is correct because the break-even point occurs when total revenue exactly covers all costs—both fixed costs and variable costs per unit. At this point, there is no profit or loss, and the contribution from each additional unit sold begins to contribute to fixed costs once past break-even.
Option 2: False. This would be inaccurate because it contradicts the fundamental definition of break-even, which is not about covering only either fixed costs or variable costs in isolation nor about any other limited subset of costs. Saying break-even doesn’t involve both cost types ignores the essential mix of fixed and variable costs that must be covered by revenue.
In summary, the statement aligns with standard cost-volume-profit concepts: revenue must equal the sum of fixed and variable costs to reach break-even, and any sales beyond that point begin to generate profit.

11:709:448:01 FOOD PROD MGMT FINAL Exam - F25- Dec 18- Requires Respondus LockDown Browser

True or False? The break-even point is the point at which the level of sales is equal to a foodservice's combined variable and fixed costs.

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