Question

To attain a target profit, the total gross margin generated from sales must be sufficient to cover total fixed costs plus the target profit.

O True O False

Answer 1

True

Step-by-step explanation:

In this question, we have to use the break-even point in the unit formula which is shown below:

Break-even point in units = (Total fixed cost + target profit) ÷ (Contribution margin per unit)

where,

Contribution margin per unit = Selling price per unit - Variable expense per unit

Hence, the given statement is true because of the above formula shown.