Question

what is the formula for determining a break - even point? break - even point = total cost x product or service sales price break - even point = total cost / product or service sales price break - even point = total cost - product or service sales price break - even point = total cost + product or service sales price

Explanation:

The break - even point is the quantity of units (or the level of activity) at which total revenue equals total cost. If we let the number of units be \( Q \), total cost be \( TC \), and the sales price per unit be \( P \), then total revenue \( TR=P\times Q \) and at break - even \( TR = TC \), so \( P\times Q=TC \), and solving for \( Q \) (the break - even quantity) gives \( Q=\frac{TC}{P} \). In the context of the formula given in the options (where we can think of the break - even point here as the number of units or the "amount" in terms of the sales price and total cost), the formula is Break - even point \(=\frac{\text{Total cost}}{\text{Product or service sales price}}\).

Answer:

B. Break - even point = Total cost / Product or service sales price