The contribution margin at the break-even point plus total fixed costs equals total revenues.
Option D. plus total fixed costs equal total revenues.
Divide the fixed cost by the contribution margin. The contribution margin is determined by subtracting variable costs from the price of the product. This amount is used to cover fixed costs.
At breakeven, the total contribution margin covers only fixed costs. No extra money to make profits and free cash flow. This shows the break-even point. That is when the contribution margin dollar equals the fixed cost.
The contribution margin can be stated in gross amount or by item. This represents the additional money generated for each product/unit sold after deducting the variable portion of the company's expenses.
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