If Q equals the level of output, P is the selling price per unit, V is the variable cost per unit, and F is the fixed cost, then the break-even point in units is:
A) Q ÷ (P − V).
B) F ÷ (P − V).
C) V ÷ (P − V).
D) F ÷ [Q(P − V)].

Question

Quizplus · Accepted Answer

The break-even point is the level of output at which total revenue equals total cost. Total revenue is equal to the selling price per unit multiplied by the number of units sold. Total cost is equal to the variable cost per unit multiplied by the number of units sold plus the fixed cost. Therefore, the break-even point in units is equal to the fixed cost divided by the difference between the selling price per unit and the variable cost per unit.

If Q Equals the Level of Output, P Is the Selling