At the break-even point, contribution is equal to 

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UGC NET Paper 2: Commerce 4th March 2023 Shift 2
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  1. Variable cost 
  2. Profit 
  3. Fixed cost 
  4. Sales  

Answer (Detailed Solution Below)

Option 3 : Fixed cost 
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UGC NET Paper 1: Held on 21st August 2024 Shift 1
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Detailed Solution

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The correct answer is Fixed cost 

Key Points

  •  Break-even analysis
    • In economics, business, and cost accountin, it  refers to the point at which total costs and total revenue are equal. A break-even point analysis is used to determine the number of units or dollars of revenue needed to cover total costs (fixed and variable costs).
    • The formula for break-even analysis is as follows:
    • Break-Even Quantity = Fixed Costs / (Sales Price per Unit – Variable Cost Per Unit

    • where:

      • Fixed Costs are costs that do not change with varying output (e.g., salary, rent, building machinery)

      • Sales Price per Unit is the selling price per unit

      • Variable Cost per Unit is the variable cost incurred to create a unit
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