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The break-even quantity is the fixed cost divided by the

  • A.variable cost per unit
  • B.total cost per unit
  • C.contribution per unit
  • D.selling price per unit

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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