Fixed Expenses = Quantity Sold Gross Profit Per Unit. How? - Vidyadip

Question

Fixed Expenses = Quantity Sold Gross Profit Per Unit. How?

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Answer

We know that at break-even level, Total Revenue - Total Cost.
i.e. (Quantity Sold × Unit Price) = (Quantity Sold × Unit Cost) + Fixed Expenses.
Or Quantity Sold × (Unit Price - Unit Cost) = Fixed Expenses.
Or Quantity Sold × Gross Profit Per Unit = Fixed Expenses.

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