At the break-even point, profits on the sale of a product are ______.

At the break-even point, profits on the sale of a product are ______.

• A. Positive
• B. Zero
• C. Negative
• D. Variable

Answer: (B)

At the break-even point, total revenue exactly covers total costs, so there is no net profit or loss. This happens when the contribution from sales (price minus variable cost per unit, times quantity) equals fixed costs. When total contribution equals fixed costs, profit is zero. Sell more than that and you make a positive profit; sell less and you incur a loss. So zero is the best answer because it reflects that exact balance where the business isn’t earning or losing money on the sales of the product. The idea of being positive would mean some profit already, while negative would mean a loss; “variable” doesn’t describe the profitability status at break-even.

At the break-even point, total revenue exactly covers total costs, so there is no net profit or loss. This happens when the contribution from sales (price minus variable cost per unit, times quantity) equals fixed costs. When total contribution equals fixed costs, profit is zero. Sell more than that and you make a positive profit; sell less and you incur a loss. So zero is the best answer because it reflects that exact balance where the business isn’t earning or losing money on the sales of the product. The idea of being positive would mean some profit already, while negative would mean a loss; “variable” doesn’t describe the profitability status at break-even.