Break-even point: where profit is zero, revenue equals total costs

Steps:

• Define break-even as the sales level where total revenue equals total costs (fixed + variable), so profit = 0.
• Calculate contribution margin as sales revenue minus variable costs.
• At break-even, contribution margin exactly covers fixed costs.
• Verify options against this: only one matches the condition where contribution = fixed costs.

Why A is correct:

• By definition, at break-even, contribution (revenue - variable costs) equals fixed costs, as total revenue covers all costs with no profit.

Why the others are wrong:

• B: Sales revenue equals total costs (fixed + variable), not just fixed costs.
• C: Profit is zero at break-even, not positive.
• D: Variable costs equal variable portion of revenue, unrelated to equaling fixed costs.

Final answer: A