When fixed costs are divided by the contribution margin ratio the result will provide management with the break-even point in sales dollars.

Question

Quizplus · Accepted Answer

This statement is true. The break-even point in sales dollars can be calculated by dividing fixed costs by the contribution margin ratio, which represents the portion of each sales dollar available to contribute towards covering fixed costs and generating profit.

When Fixed Costs Are Divided by the Contribution Margin Ratio