When fixed costs are divided by the contribution margin ratio the result will provide management with the break-even point in sales dollars.

Contribution Margin Ratio

A financial metric that shows the percentage of sales revenue that exceeds variable costs, indicating how much revenue contributes to fixed costs and profit.

Break-Even Point

The point where total costs and total revenues are equal, leading to no profit or loss from production or sales.

Fixed Costs

Costs such as rent, salaries, and insurance are invariant, unaffected by the quantity of production or sales.