If ‘F’ is the fixed cost, ‘V’ is the variable cost per unit (or total variable costs) and ‘P’ is the selling price of each unit (or total sales value), then break-even point is equal to

A) $$\frac{{{\text{F}} \times {\text{V}}}}{{\text{P}}}$$ B) $$\frac{{{\text{F}} \times {\text{P}}}}{{\text{V}}}$$ C) $$\frac{{\text{F}}}{{1 + \frac{{\text{V}}}{{\text{P}}}}}$$ D) $$\frac{{\text{F}}}{{1 - \frac{{\text{V}}}{{\text{P}}}}}$$

Answer & Solution

Correct Answer: Option D

If ‘F’ is the fixed cost, ‘V’ is the variable cost per unit (or total variable costs) and ‘P’ is the selling price of each unit (or total sales value), then break-even point is equal to $$\frac{{\text{F}}}{{1 - \frac{{\text{V}}}{{\text{P}}}}}.$$

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If F is the fixed cost V is the variable cost...

If ‘F’ is the fixed cost, ‘V’ is the variable cost per unit (or total variable costs) and ‘P’ is the selling price of each unit (or total sales value), then break-even point is equal to

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