Final answer:
The formula used to compute the break-even point in units is FC/CM per unit (Option a). The break-even point is the point at which a company's total revenue equals its total costs, resulting in zero profit or loss. By dividing the fixed costs by the contribution margin per unit, we can determine the number of units that need to be sold in order to reach the break-even point.
Step-by-step explanation:
The formula used to compute the break-even point in units is FC/CM per unit (Option a).
The break-even point is the point at which a company's total revenue equals its total costs, resulting in zero profit or loss. Fixed costs (FC) are the costs that do not change with the level of production, such as rent, utilities, and salaries. Contribution margin per unit (CM per unit) is the difference between the selling price per unit and the variable cost per unit.
By dividing the fixed costs by the contribution margin per unit, we can determine the number of units that need to be sold in order to cover all the fixed costs and reach the break-even point.