Caterpillar Wants to Lower Production Costs in Order to Decrease

Multiple Choice

Caterpillar wants to lower production costs in order to decrease its required break even volume. Which formula should they use for the break-even calculation?

A) fixed costs/(variable costs - price)
B) fixed costs/(price - variable costs)
C) fixed costs × (variable costs - price)
D) (price - variable costs) /fixed costs
E) fixed costs/unit sales