Breakeven point in units can be calculated as

Breakeven point in units can be calculated as

• A. Total fixed costs / contribution per unit
• B. Total fixed costs / selling price per unit
• C. Contribution per unit / selling price per unit
• D. Selling price per unit × break-even quantity

Answer: (A)

The breaking-even point in units is found by dividing fixed costs by the contribution made by each unit. The contribution per unit equals the selling price minus the variable cost per unit, so each unit sold adds this amount toward covering fixed costs. When total contribution from all units equals fixed costs, you’ve broken even, hence units = fixed costs ÷ contribution per unit. For example, if fixed costs are 10,000 and the selling price is 50 with variable cost 30, the contribution per unit is 20, so break-even units are 10,000 ÷ 20 = 500. The other approaches don’t give the quantity: dividing fixed costs by selling price ignores variable costs; dividing contribution per unit by selling price gives the contribution margin ratio, not the unit quantity; multiplying selling price by break-even quantity would yield total revenue at break-even, not the quantity itself.

The breaking-even point in units is found by dividing fixed costs by the contribution made by each unit. The contribution per unit equals the selling price minus the variable cost per unit, so each unit sold adds this amount toward covering fixed costs. When total contribution from all units equals fixed costs, you’ve broken even, hence units = fixed costs ÷ contribution per unit.

For example, if fixed costs are 10,000 and the selling price is 50 with variable cost 30, the contribution per unit is 20, so break-even units are 10,000 ÷ 20 = 500.

The other approaches don’t give the quantity: dividing fixed costs by selling price ignores variable costs; dividing contribution per unit by selling price gives the contribution margin ratio, not the unit quantity; multiplying selling price by break-even quantity would yield total revenue at break-even, not the quantity itself.