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garik1379 [7]
3 years ago
13

Jones Lumber Co. has annual fixed costs including depreciation of $300,000 and variable costs that are 88.25 percent of sales. W

hat is Jones' break-even level of sales
Business
1 answer:
STALIN [3.7K]3 years ago
7 0

Answer:

$2,553,191

Explanation:

The formula to compute the break even point in dollars amount is presented below:

= (Fixed cost ) ÷ (Profit volume ratio)

where,  

Fixed cost = $300,000

And the profit volume ratio would be

= (Contribution margin) ÷ (Sales) × 100

We assume the sales be 100%

So, the variable cost is

= 88.25%

And, the contribution margin is

= 100 - 88.25

= 11.75%

So, the break even sales would be

= $300,000 ÷  11.75%

= $2,553,191

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