ECONOMICS

Detailed explanation-1: -How to calculate a break-even point based on units: Divide fixed costs by the revenue per unit minus the variable cost per unit. The fixed costs are those that do not change no matter how many units are sold.

Detailed explanation-2: -This pricing methodology helps the company in setting up the lowest acceptable price. Break-even price is calculated by using this formula = (Total fixed cost/Production unit volume) + Variable Cost per unit.

Detailed explanation-3: -The break-even point is where total sales revenue equals total cost. The contribution margin ratio can be calculated by subtracting the variable cost ratio from one. The break-even point in sales dollars is equal to the break-even units multiplied by cost.

Detailed explanation-4: -Key Takeaways. 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.