Both the traditional income statement approach and the contribution margin approach will yield the same answer for calculating breakeven points.

Question

Quizplus · Accepted Answer

Both approaches will result in the same breakeven point because they are based on the same basic formula: Fixed Costs ÷ (Unit Selling Price - Variable Cost per Unit) = Breakeven Point in Units. The only difference is in how the costs are classified and presented. The traditional income statement approach separates costs into fixed and variable categories, while the contribution margin approach focuses on the contribution margin per unit of product sold.

Both the Traditional Income Statement Approach and the Contribution Margin