The break-even point in sales volume is calculated by:

The calculation of the break-even point in sales volume is fundamentally rooted in understanding the relationship between fixed costs, variable costs, and contribution margin. The correct method involves dividing total fixed costs by the contribution margin per unit.

The contribution margin represents the amount of revenue from each unit sold that contributes to covering fixed costs after accounting for variable costs associated with producing that unit. By dividing fixed costs by the contribution margin per unit, one can determine how many units must be sold to cover all fixed expenses, effectively reaching the break-even point where no profit or loss occurs.

This approach provides a clear numerical target for sales volume needed to achieve zero net income, which is crucial for financial planning and decision-making within a physician practice. Understanding this calculation helps practice managers assess the viability of services offered and make informed adjustments to pricing or cost structures as needed.