Which of the following formulae is correct when using the contribution margin method to determine the break-even point?
A)Revenues less operating income equal variable costs plus fixed costs.
B)Unit contribution margin times unit variable cost equals the break-even number of units.
C)Unit contribution margin times the break-even number of units equals total variable costs.
D)Selling price less unit contribution margin equals unit fixed cost for all values below or at the break-even number of units.
E)Unit contribution margin times the break-even number of units equals fixed costs.

Question

Quizplus · Accepted Answer

The contribution margin method calculates the break-even point by dividing fixed costs by the unit contribution margin, which is the selling price minus the variable cost per unit. Thus, the unit contribution margin times the break-even number of units equals fixed costs.

Which of the Following Formulae Is Correct When Using the Contribution