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 following formula can be used to estimate a firm’s break-even point: Fixed costs / (price-variable costs) = break-even point in units.
Detailed explanation-3: -Break-even point in units = Fixed costs ÷ Contribution margin per unit. Your break-even point in units will tell you exactly how many units you need to sell to turn a profit. If you’re able to sell more units beyond this point, you’ll be making a profit.
Detailed explanation-4: -In accounting, the breakeven point is calculated by dividing the fixed costs of production by the price per unit minus the variable costs of production. The breakeven point is the level of production at which the costs of production equal the revenues for a product.
Detailed explanation-5: -There are three main methods used to calculate break-even points-Cost Volume Profit Analysis, Break Even Point in Units and Break Even Point in Sales Value-each of which has its own advantages depending on individual circumstances and businesses needs.