All categories

3 years ago

A company has total fixed costs of $180,000 and a contribution margin ratio of 30%. How much sales are necessary to break even?

Business

1 answer:

svet-max [94.6K]3 years ago

3 0

Answer:

b) $600,000

Explanation:

The break-even sales can be regarded as sales value in which the result makes the firm to report zero profit.

Total fixed costs was given from the question as ( $180,000)

The Contribution margin ratio was give from the question as ( 30%)= 0.3

✓break even point can be calculated as ratio of Total fixed costs to Contribution margin ratio. This can be expressed as

break even point=[Total fixed costs ]/ [ Contribution margin ratio.]

Substitute,

break even point= [ $180,000]/ [0.3]

=$600,000

You might be interested in

In response to dwindling sales of organic meats, Hain Celestial executives decided to promote the sale of organically grown nuts

3241004551 [841]

Answer:

Product substitute

Explanation:

Product substitute is defined as one that meets similar needs of the consumer. As demand for one of such goods rises the demand of the other tends to fall as the meet similar needs.

In the given scenario organic meats are seen as being substituted by organically grown nuts as a source of protein.

So when Hain Celestial has dwindling sales of organic meats they were considering organically grown nuts as a different product to give to customers

3 0

3 years ago

At the beginning of the period, there were 500 units in process that were 60% complete as to conversion costs and 100% complete

elena-s [515]

I think the answer is probably C

6 0

3 years ago

Understanding how costs behave is useful to management for all the following reasons except a. predicting customer demand b. pre

DedPeter [7]

Answer:

The correct answer is A

Explanation:

Study of the cost behavior provides the useful information for determining the costs.Customer demand could not be predicted by paying the attention to how the costs varies or change when the activity changes. However, the costs could be estimated or determined and changes could be made to the production which is existing in order to maximise the profit for the business.

3 0

3 years ago

A direct participation program shows the following operation results: Revenues: $3 million Operating expense: $1 million Interes

stiks02 [169]

Answer:

The cash flow from program operation is $1,600,000.

Explanation:

Prepare the Cash Flow from Operating Activities Section to determine the cash flow from program operation.

<u>Cash Flow from Operating Activities</u>

Revenue $3,000,000

Less Expenses :

Operating Expenses $1,000,000

Interest expense $200,000

Management fees $200,000

Depreciation $3,000,000 ($4,400,000)

Operating Profit / (Loss) ($1,400,000)

Add Back Depreciation $3,000,000

Operating Cash flow $1,600,000

3 0

3 years ago

Valley, Inc. has 9,000 shares of preferred stock outstanding. The preferred stock has a $90 par value, a 14% dividend rate

EastWind [94]

Answer:

The dividends payout to preferred stockholders is $113,400 as shown below.

Explanation:

The total dividends payable to holders of preferred shares can be computed thus:

Preferred shares dividends=9000*$90*14%

Preferred shares dividends =$113,400

Preferred shareholders have prior claims to dividends ahead of ordinary shareholders,but after bondholders' interest payments have been settled.

The same way they also have precedence in the distribution of company's assets before ordinary shareholders upon the liquidation of the company.

The downside is that they cannot share in excess profits after payment of dividends as they are part-owners of the company unlike ordinary shareholders.

8 0

3 years ago