The formula for break-even point in terms of units is:
A)Total variable costs/Unit contribution margin
B)Total fixed costs/Contribution margin ratio
C)Total fixed costs/Unit contribution margin
D)Total variable costs/Total fixed costs

Question

Quizplus · Accepted Answer

The formula for break-even point in terms of units is Total fixed costs divided by Unit contribution margin. This is because the break-even point is where the total revenue equals total costs, and this occurs when the quantity sold (in units) times the unit contribution margin equals the total fixed costs. Rearranging this equation gives the formula for break-even point in terms of units as Total fixed costs divided by Unit contribution margin.

The Formula for Break-Even Point in Terms of Units Is