Question

Break-even revenue for the multiple-product firm can a.be calculated by dividing total fixed cost by the overall contribution margin ratio. b.be calculated by dividing segment fixed cost by the overall contribution margin ratio. c.be calculated by dividing total fixed cost by the overall variable cost ratio. d.be calculated by multiplying total fixed cost by the contribution margin ratio. e.not be calculated; break-even revenue can only be computed for a single-product firm.

Answer 1

The correct answer is letter "A": be calculated by dividing total fixed cost by the overall contribution margin ratio.

Step-by-step explanation:

In the corporate world, the break-even point is the level at which a company's costs meet the company's profits, implying no loss either revenue is generated.

The contribution margin ratio is calculated by subtracting the variable expenses from the sales revenues of an entity. It is expressed as a percentage (ratio). The ratio expresses the ability an organization has to pay its fixed costs.

Thus, the breakeven point could be calculated by dividing the company's total fixed costs by the total contribution margin.