The break-even point is estimated by
A)multiplying revenue per unit times the quantity sold.
B)dividing fixed contribution per unit by variable costs.
C)multiplying fixed costs by contribution per unit.
D)dividing fixed costs by contribution per unit.
E)dividing variable costs by fixed costs.

Question

Quizplus · Accepted Answer

The break-even point is the level of sales at which total revenue equals total costs. To find the break-even point, we need to determine the amount of sales necessary to cover all fixed and variable costs. This can be done by dividing fixed costs by the contribution margin per unit (price per unit minus variable costs per unit). Therefore, choice D, dividing fixed costs by contribution per unit, is the best choice.

The Break-Even Point Is Estimated by