What is the formula for Break-Even Point in Sales Dollars?
A)Total Fixed Costs / Unit Contribution Margin.
B)(Total Fixed Costs + Target Profit)/ Unit Contribution Margin.
C)Sales Units - Break-Even Sales Units.
D)Total Fixed Costs / Contribution Margin Ratio.

Question

Quizplus · Accepted Answer

The formula for Break-Even Point in Sales Dollars is Total Fixed Costs divided by Contribution Margin Ratio. This is because Contribution Margin Ratio represents the portion of sales revenue that can be applied to cover fixed costs and contribute to profit. Therefore, dividing Total Fixed Costs by Contribution Margin Ratio will give us the level of sales required to cover all fixed costs and break-even.

What Is the Formula for Break-Even Point in Sales Dollars