Question

Sabv Corporation's break-even-point in sales is $870,000, and its variable expenses are 75% of sales. If the company lost $30,000 last yeas, sales must have amounted Muhiple Choice $715,500 $750.000 $790,000 $722.000

Answer 1

To find the actual sales when Sabv Corporation reported a $30,000 loss, we determine that its fixed costs at break-even are $217,500. Adding the $30,000 loss to these fixed costs, we find out that the actual sales were $990,000.

Step-by-step explanation:

To calculate Sabv Corporation's actual sales, when the company lost $30,000,

we first need to understand the fixed and variable costs. Since the break-even point is $870,000 and the variable costs are 75% of sales, we can deduce that the fixed costs are the remaining 25% of $870,000, which amounts to $217,500.

Now, if the company made a loss of $30,000, this implies that it did not cover its fixed costs fully by $30,000.

To determine the sales amount, we add the unfilled fixed costs ($217,500 + $30,000 = $247,500) to the variable costs.

Hence, sales must have been $247,500 divided by 25% (which are the fixed costs as a percentage of sales), which equals $990,000.