Breakeven sales in dollars can be obtained without knowing the dollar value of contribution margin per unit.

Question

Quizplus · Accepted Answer

Breakeven sales in dollars can be computed using the following formula:

Breakeven Sales in Dollars = Fixed Costs / Contribution Margin Ratio

Contribution margin ratio is defined as the contribution margin expressed as a percentage of sales. It can be calculated as (Sales - Variable Costs) / Sales.

While it is common to calculate breakeven sales using the contribution margin per unit, it can also be obtained in dollars by dividing fixed costs by the contribution margin ratio.

Breakeven Sales in Dollars Can Be Obtained Without Knowing the Dollar