Which of the following is the correct formula for the break-even sales volume?
A)Fixed costs divided by the variable costs per unit.
B)Fixed costs divided by the contribution margin per unit.
C)Variable costs divided by the contribution margin per unit.
D)Variable costs divided by the fixed costs per unit.

Question

Quizplus · Accepted Answer

The break-even point is the level of sales at which total revenue equals total costs. To calculate the break-even sales volume, we need to determine the level of sales at which there is neither a profit nor a loss. The contribution margin per unit represents the amount of revenue available to cover fixed costs and contribute to profits after variable costs have been paid. Therefore, the correct formula for break-even sales volume is fixed costs divided by the contribution margin per unit.

Which of the Following Is the Correct Formula for the Break-Even