The formula for break-even point in terms of sales dollars is:
A)Total variable costs/Contribution margin ratio
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 sales dollars is total fixed costs divided by contribution margin ratio. This formula takes into account the fixed costs that must be covered before the company can begin to make a profit. The contribution margin ratio measures how much of each dollar in sales goes towards covering the variable costs of producing the product or service. By dividing the total fixed costs by the contribution margin ratio, the break-even point in sales dollars can be calculated.

The Formula for Break-Even Point in Terms of Sales Dollars