Discussion
The break-even sales value is the fixed cost divided by the
Answer: A
Correct answer: contribution margin ratio
Dividing by the ratio converts the fixed cost into the sales value needed to cover it:
\[ S_{BE} = \frac{F}{(p - v)/p} \]which is the same answer as \( Q_{BE} \times p \). The ratio form is the more useful of the two in practice, since a firm with many products can compute an overall margin ratio from its accounts without counting units at all.
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