Final answer:
The break-even point is the level of sales at which a business neither makes a profit nor incurs a loss. It can be calculated by dividing fixed costs by the contribution margin per unit. For example, if a business has fixed costs of $10,000 and a contribution margin per unit of $5, it would need to sell 2,000 units to break even.
Step-by-step explanation:
The break-even point is the point at which a business neither makes a profit nor incurs a loss. It is the level of sales at which total revenue equals total cost. To determine the break-even point, the business needs to divide its fixed costs by the contribution margin per unit, which is the selling price per unit minus the variable cost per unit.
For example, if a business has fixed costs of $10,000 and a contribution margin per unit of $5, it would need to sell 2,000 units to break even (10,000 / 5 = 2,000). Therefore, the business would need to sell at least 2,000 servings of ice cream to break even.