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