When calculating the breakeven point in terms of sales revenue,fixed costs should be divided by the contribution margin ratio.

Question

Quizplus · Accepted Answer

This is correct. The breakeven point represents the point at which the company's revenue is equal to its total costs. The contribution margin ratio is a measure of how much each sale contributes to covering the company's fixed costs and generating profit. To calculate the breakeven point in terms of sales revenue, therefore, we need to divide the fixed costs by the contribution margin ratio.

When Calculating the Breakeven Point in Terms of Sales Revenue,fixed