Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 10

Why does the issue of taxes not affect the calculation of the breakeven point?

Step 1 of 2

The breakeven point is a point where forecasted revenue matches the estimated total costs. It is the quantity of output sold at which total revenue equals total cost. Breakeven point in the unit is arrived by dividing fixed costs by the contribution margin. Break-even revenue is equal to Fixed cost divided by contribution margin%.