Question

Break-even points in units sold (breakeven volume):

a) Variable Expenses / Contribution Margin per unit
b) Fixed Expenses / Contribution Margin per unit
c) Total Revenue / Fixed Expenses
d) Total Revenue / Variable Expenses

Answer 1

The break-even points in units sold are calculated by dividing the fixed expenses by the contribution margin per unit. This helps businesses to determine the number of units they need to sell to cover all costs.

Step-by-step explanation:

The student's question is about determining the break-even points in units sold, which refers to the volume of units a business needs to sell in order to cover all of its costs, without making a profit or a loss. The correct formula in finding the break-even point in units sold is by taking the Fixed Expenses and dividing them by the Contribution Margin per unit. The contribution margin per unit is calculated by subtracting the variable expenses per unit from the selling price per unit. This essential calculation helps businesses to understand how many units they need to sell at a given price to cover their fixed costs, after their variable costs have been paid for each unit sold.