Fixed costs divided by weighted-average contribution margin per unit equals:

Question

Quizplus · Accepted Answer

This formula determines the number of units that need to be sold to cover fixed costs, which is the definition of break-even point in units. The contribution margin ratio looks only at the percentage of revenue available to cover fixed costs, the margin of safety ratio looks at the excess sales beyond the break-even point, and the break-even sales in dollars formula divides fixed costs by the contribution margin ratio.

Fixed Costs Divided by Weighted-Average Contribution Margin Per Unit Equals