Fixed Costs Divided by Contribution Margin Per Unit Equals Breakeven

question 103

True/False

Fixed costs divided by contribution margin per unit equals breakeven point in unit sales.

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Definitions:

Break-Even Sales

The amount of revenue required to cover both the variable and fixed costs of a business, resulting in neither profit nor loss.

Margin Of Safety

The difference between actual sales and sales at the break-even point, providing a cushion that measures the business's ability to withstand sales fluctuations.

Current Sales

The total revenue generated from goods or services sold by a company during the current period.

Break-Even Sales

The amount of revenue required to cover both the fixed and variable costs of a business, indicating the point at which profit starts to be generated.