Question

gemma corporation sells a single product for $40 per unit. last year, the company's sales revenue was $2,950,000 and its net operating income was $1,000,000. if fixed expenses totaled $770,000 for the year, the break-even point in sales dollars was: $770,000 $1,925,000 $1,180,000 $1,770,000

Answer 1

if fixed expenses totaled $770,000 for the year, the break-even point in sales dollars was:  $1,925,000

What is breakeven point in dollars?

The breakeven point in dollars is the amount of sales revenue gemma corporate needs to achieve in order to make zero profit, such that total sales revenue is the same as total costs

breakeven point=fixed costs/contribution margin ratio

fixed costs=$770,000

contribution margin ratio=unknown

The fact variable cost was not given means the formula is not appropriate in this context, however, company's net operating income was $1,000,000, which means that the breakeven point with a zero profit is sales revenue minus the net operating income

break-even point in sales dollars=$2,950,000-$1,000,000

break-even point in sales dollars=$1,925,000

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