The correct answer is: C. Operating break-even point
The operating break-even point is the level of sales at which a company’s revenue equals its total operating costs. At this point, the company is not making a profit or a loss. The operating break-even point can be calculated by dividing fixed costs by the contribution margin per unit.
The contribution margin per unit is the difference between the selling price per unit and the variable cost per unit. The fixed costs are the costs that do not change with the level of production or sales.
The operating break-even point is an important concept for managers to understand because it helps them to determine how much sales they need to generate in order to cover their costs. It is also a useful tool for planning and budgeting.
The other options are incorrect because:
- Break-even point is the level of sales at which a company’s revenue equals its total costs.
- Financial break-even point is the level of sales at which a company’s EBIT equals its interest expense.
- Overall break-even point is the level of sales at which a company’s EBIT equals its total costs, including interest expense.