Discussion
The break-even quantity is the fixed cost divided by the
Answer: C
Correct answer: contribution per unit
The break-even quantity is the number of units whose contributions just cover the fixed cost:
\[ Q_{BE} = \frac{F}{p - v} \]Dividing by the price would ignore the variable cost each unit incurs, and dividing by the variable cost has no meaning at all. The relation makes the two levers plain: reduce the fixed cost or raise the contribution.
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