Question

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)].

Answer 1

The break-even point in units is calculated using the formula B. F ÷ (P – V), which divides the total fixed costs by the difference between the selling price per unit and the variable cost per unit.

Step-by-step explanation:

The correct answer to the question of how to calculate the break-even point in units is B. F ÷ (P – V). This formula means that you divide the Total Fixed Costs (F) by the difference between the Selling Price per Unit (P) and the Variable Cost per Unit (V). The result gives you the number of units that need to be sold to cover all costs, which is the break-even point. The other options provided are not the correct ways to calculate the break-even point.