To calculate break-even point, the sales person must divide:
A)Gross profit percentage by fixed costs
B)Gross profit percentage by cost per hour
C)Cost per hour by gross profit percentage
D)Cost of goods sold by sales
E)Fixed costs by gross profit percentage

Question

Quizplus · Accepted Answer

The break-even point is the level of sales at which total revenues equal total costs, resulting in neither a profit nor a loss. The calculation requires dividing fixed costs by the gross profit percentage. The fixed costs represent the minimum level of expenditure required to keep the business operating, while the gross profit percentage is the revenue left over after deducting the cost of goods sold. Therefore, option E (Fixed costs by gross profit percentage) is the correct choice.

To Calculate Break-Even Point, the Sales Person Must Divide