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3 years ago

Use the following information to determine the break-even point in sales dollars:

Business

1 answer:

dolphi86 [110]3 years ago

7 0

Answer:

Break-even point (dollars)= $362,400

Explanation:

Giving the following information:

Unit sales 50,000

Units Dollar sales $500,000

Fixed costs $204,000

Variable costs $187,500

First, we need to calculate the contribution margin ratio:

Contribution margin ratio= total CM / Sales

Contribution margin ratio= (500,000 - 187,500) / 500,000

Contribution margin ratio= 0.625

Now, the break-even point in sales dollars:

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 204,000 / 0.625

Break-even point (dollars)= $362,400

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