The formula for the break-even volume calculation is ________.
A) (price - variable costs)/fixed costs
B) fixed costs/(price - variable costs)
C) fixed costs/unit sales
D) fixed costs/(variable costs - price)
E) fixed costs X (variable costs - price)

Question

Quizplus · Accepted Answer

The formula for the break-even volume calculation is fixed costs divided by the difference between the price and variable costs. This is because at the break-even point, total revenue equals total costs, or in other words, price multiplied by volume equals variable costs per unit multiplied by volume plus fixed costs. Solving for volume, we get the formula (price - variable costs)/fixed costs. Therefore, the correct choice is B, fixed costs/(price - variable costs).

The Formula for the Break-Even Volume Calculation Is ________