Breakeven point using the contribution margin approach is calculated by: a) Addi

Question

Breakeven point using the contribution margin approach is calculated by:

a) Adding fixed and variable costs and dividing by the sales price per unit.
b) Subtracting variable costs from sales price and dividing that number by the selling price per unit.
c) Subtracting variable costs from the selling price, adding fixed costs, and dividing by the number of units produced.
d) Subtracting variable costs per unit from selling price per unit and dividing that number into total fixed costs.
e) A & C only

Explanation / Answer

d) Subtracting variable costs per unit from selling price per unit and dividing that number into total fixed costs.

Break even point = fixed costs/(sales price per unit - variable cost per unit)

sales prices per unit minus variable costs per unit is also known as contribution margin per unit

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