Answer:
C) $729,027
Explanation:
The formula to compute the break even point in dollars amount is shown below:
= (Fixed cost ) ÷ (Profit volume ratio)
where,
Fixed cost = $100,000 + $250,000 + $45,000 = $395,000
And the profit volume ratio would be
= (Contribution margin) ÷ (Sales) × 100
where Contribution margin equal to
= Sales - variable cost
The sales = $1,500,000 × 110% = $1,650,000
Variable cost would be
Direct Material = $250,000 × 112% = $280,000
Direct Labor = $150,000 × 112% = $168,000
Variable overhead = $75,000 ×112% = $84,000
Variable Selling & admin. Exp = $200,000 × 112% = $224,000
Total Variable Overhead = $756,000
Now the Contribution margin would be
= $1,650,000 - $756,000
= $894,000
And, Contribution margin ratio
= $894,000 ÷ $1,650,000 = 54.18181818%
So, the break-even point would be
= $395,000 ÷ 54.18181818%
= $729,027 approx
