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mel-nik [20]
3 years ago
11

Last year Easton Corporation reported sales of $480,000, a contribution margin ratio of 25% and a net loss of $16,000. Based on

this information, the break-even point was:
A. $435,000

B. $544,000

C. $506,000

D. $600,000
Business
1 answer:
Debora [2.8K]3 years ago
8 0

Answer:

B. $544,000

Explanation:

Given: Sales: $480000.

           Contribution margin ratio= 25%

           net loss= $16000.

Break even point: It is point in business where profit is equal to expenses of the business.

Now, finding the fixed expense.

Fixed expense= loss+ (contribution\ margin\times sales)

⇒ Fixed expense= 16000+ (0.25\times 480000)

⇒ Fixed expense= 16000+ 120000

∴ Fixed expense=  \$ 136000

Next, computing the break even point

Sales to Break even point= \frac{Fixed\ expense}{Contribution\ margin\ ratio}

⇒ Break even point= \frac{136000}{0.25}

∴ Break even point= \$ 544000

Hence, the break even point was $544000

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