COST ACCOUNTING
BREAK EVEN POINT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Fixed Costs / Contribution Margin per unit
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Total Costs-Fixed Costs x variable costs per unit
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Fixed Costs / Sales price per unit-variable costs per unit
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Contribution Margin per unit / Fixed Costs
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Detailed explanation-1: -To calculate the break-even point in units use the formula: Break-Even point (units) = Fixed Costs ÷ (Sales price per unit – Variable costs per unit) or in sales dollars using the formula: Break-Even point (sales dollars) = Fixed Costs ÷ Contribution Margin.
Detailed explanation-2: -The break-even point is the point where a company’s revenues equals its costs. The calculation for the break-even point can be done one of two ways; one is to determine the amount of units that need to be sold, or the second is the amount of sales, in dollars, that need to happen.
Detailed explanation-3: -The breakeven point (BEP) formula is determined by dividing the total fixed costs associated with production by the contribution per unit, i.e, Sale price per unit minus the variable costs per unit.
Detailed explanation-4: -Your break-even point is equal to your fixed costs, divided by your average selling price, minus variable costs. It is the point at which revenue is equal to costs and anything beyond that makes the business profitable. Formula: break-even point = fixed cost / (average selling price-variable costs)