Question

Maroon company's contribution margin ratio is 24%. total fixed costs are $84,000. what is maroon's break-even point in sales dollars?

Answer 1

Fixed costs = $84,000
Contribution margin ratio = 24%

To find the break-even point in sales dollars:
Break-even in sales = Fixed costs/contribution margin ratio
Break-even in sales = 84,000/0.24
Break-even in sales = $350,000

Answer 2

Answer: Break-even point in sales is $350,000.

Explanation:

Break-even point in sales can be computed by dividing total fixed cost by contribution margin ratio.

Given,

Fixed cost = $84,000

Contribution margin ratio = 24% = 0.24

$Break-even point in sales = \frac{Total Fixed Cost}{Contribution margin ratio}$

$Break-even point in sales = \frac{ 84,000}{0.24}$

$Break-even point in sales = 350,000$

Thus, break-even point in sales dollars is $350,000.