Question
Download Solution PDFAt the break-even point, contribution is equal to
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is Fixed cost
Key Points
- Break-even analysis
- In economics, business, and cost accountin, it refers to the point at which total costs and total revenue are equal. A break-even point analysis is used to determine the number of units or dollars of revenue needed to cover total costs (fixed and variable costs).
- The formula for break-even analysis is as follows:
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Break-Even Quantity = Fixed Costs / (Sales Price per Unit – Variable Cost Per Unit
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where:
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Fixed Costs are costs that do not change with varying output (e.g., salary, rent, building machinery)
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Sales Price per Unit is the selling price per unit
- Variable Cost per Unit is the variable cost incurred to create a unit
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Last updated on Jun 11, 2025
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