The sales level that results in a project's net income exactly equaling zero is called the accounting break-even.
Break even point refers to the point or sales unit where total cost is equal to total revenue. That is, both total revenue and total cost at the point are even and there neither profit nor loss.
Break even point can be computed for accounting break even and the cash break even points. The difference between the two is that accounting break even point include depreciation in the fixed cost while the cash break even point deduct non cash expenses from the fixed cost.
The formula for the are as follows:
Accounting break even point = Fixed cost / (Unit price - Unit cost)
Cash break even point = (Fixed cost - Depreciation) / (Unit price - Unit cost)
The break-even analysis is a tool that provides the level of units or sales necessary to cover both variable and fixed costs.
Therefore, we can conclude that the correct option is B.
Your question is incomplete, but most probably your full question was:
The sales level that results in a project's net present value exactly equaling zero is called the _____ break-even.
a. leveraged
b. accounting
c. operational
d. cash
e. present value
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