Total fixed costs divided by contribution margin per unit
Total variable costs divided by selling price
Total sales revenue divided by total costs
Total fixed costs divided by selling price
The break-even point in units is calculated by dividing total fixed costs by the contribution margin per unit.
Questions & Step-by-step Solutions
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Q
Q: What is the break-even point in units?
Solution: The break-even point in units is calculated by dividing total fixed costs by the contribution margin per unit.
Steps: 3
Step 1: Identify the total fixed costs. These are costs that do not change regardless of how many units you produce, like rent or salaries.
Step 2: Calculate the contribution margin per unit. This is the selling price per unit minus the variable cost per unit (the costs that change with the number of units produced).
Step 3: Divide the total fixed costs by the contribution margin per unit. This will give you the break-even point in units.
