The break-even volume for a company is ________.
A)operating income minus fixed expenses
B)operating income plus fixed expenses divided by margin per unit
C)fixed plus variable expenses minus sales
D)fixed expenses divided by margin per unit
E)company sales divided by industry sales

Question

Quizplus · Accepted Answer

The break-even volume for a company is the fixed expenses divided by the margin per unit. This is because the break-even point is the level of sales at which total revenues equal total expenses, and the contribution margin (margin per unit) is the amount of revenue that is available to cover fixed expenses after variable expenses have been covered. Dividing fixed expenses by the margin per unit gives the number of units that must be sold to cover fixed expenses and reach the break-even point.

The Break-Even Volume for a Company Is ________