In Break Even Analysis Total Cost Consists of

Answer: C- fixed cost plus variable cost

In break-even analysis, total cost consists of fixed cost plus variable cost.

Explanation-

Break-even point – It refers to a method of identifying the point at which an organization neither makes a profit nor suffers a loss, or in other words, the point at which all costs are equal to all revenues, or the point of zero profit (Break-even point).

Fixed cost :

• The cost stays the same for a specified period (lifetime).
• This cost is independent of the volume of the production. Hence it is unaffected by the volume of the production.
• For example, rent, taxes, the supervisor’s salary, the machine’s cost, the cost of insurance, etc.

Variable cost :

• The cost varies in direct proportion to the production.
• The variable cost increases as the output increases.
• For example, the price of labor, raw materials, etc.

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