Question

Cullumber Corp. had total variable costs of $247,500, total fixed costs of $193,500, and total revenues of $450,000. Compute the required sales in dollars to break even.

Answer 1

$430,000

Step-by-step explanation:

The first step is to calculate the contribution margin

= revenues-variable cost

= $450,000-$247,500

= $202,500

The contribution margin ratio can be calculated as follows

= 202,500/450,000

= 0.45×100

= 45%

Therefore the required sales to break even in dollars can be calculated as follows

= 193,500/45

= 4300×100

= $430,000