The ratio of fixed expenses to the contribution margin ratio is the
A) indifference point.
B) break-even point in units.
C) fixed cost ratio.
D) break-even point in sales.
E) sensitivity analysis.

Question

Quizplus · Accepted Answer

The break-even point in sales is the point at which total sales revenue equals total expenses. It can be calculated by dividing total fixed costs by the contribution margin ratio. Therefore, the ratio of fixed expenses to the contribution margin ratio is a key factor in determining the break-even point in sales.

The Ratio of Fixed Expenses to the Contribution Margin Ratio