Question

Which of the following is the formula for break-even point in sales dollars? A : Fixed costs divided by contribution margin ratio. B : Fixed costs divided by unit contribution margin. C : Contribution margin ratio divided by fixed costs. D : Unit contribution margin divided by fixed costs.

Answer 1

Answer:

B. Fixed costs divided by unit contribution margin

Explanation:

In sales dollars, Break-Even point = Fixed Costs ÷ Contribution Margin.

Break-Even point in (units) = Fixed Costs / (Sales price per unit - Variable costs per unit).

The Break even point is a measure of which a company can determine if when the product its manufactured or produced will start to be profitable.