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What is the break-even point in units?

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Question: What is the break-even point in units?

Options:

  1. Total fixed costs divided by contribution margin per unit
  2. Total variable costs divided by selling price
  3. Total sales revenue divided by total costs
  4. Total fixed costs divided by selling price

Correct Answer: Total fixed costs divided by contribution margin per unit

Solution: 

The break-even point in units is calculated by dividing total fixed costs by the contribution margin per unit.

What is the break-even point in units?

Practice Questions

Q1
What is the break-even point in units?
  1. Total fixed costs divided by contribution margin per unit
  2. Total variable costs divided by selling price
  3. Total sales revenue divided by total costs
  4. Total fixed costs divided by selling price

Questions & Step-by-Step Solutions

What is the break-even point in units?
  • 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.
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