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2 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]2 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

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