Break-Even Quantity is computed as:
AEBIT / Contribution
BSales / Contribution
CFixed Cost / (Sales price − Variable cost per unit)
DFixed Cost / Sales price
Answer & Solution
Correct answer: C. Fixed Cost / (Sales price − Variable cost per unit)
1. BEP (in units) = Fixed Cost / Contribution per unit.
2. Contribution per unit = Selling price − Variable cost per unit.
3. Below BEP firm makes losses; above it earns operating profit.
_Source: ICAI BoS CA Inter Paper 6A, Ch 6 "Financing Decisions — Leverages", §3_