Q15RQ
Question
What are the three approaches to calculating the sales required to achieve the breakeven point? Give the formula for each one.
Step-by-Step Solution
Verified Answer
Answer
- Equation approach
- Contribution margin approach
- Contribution margin ratio approach
1Step 1:three approaches to calculating the sales required to achieve the breakeven point
- Equation approach
- Contribution margin approach
- Contribution margin ratio approach
2Step 2: Formula for three approaches
- equation approach:
Operating income= Net sales revenue – Total costs
- Contribution margin approach:
Required sales in units = Fixed costs + Target profit /Contribution Margin Per unit
- Contribution margin ratio approach
Contribution margin ratio = Fixed costs + Target profit / Contribution margin ratio
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