Question

Given $250,000 of fixed costs per year and a contribution margin ratio of 40%, what amount of sales dollars is required to break-even?

Answer 1

To break-even with fixed costs of $250,000 and a contribution margin ratio of 40%, the company must reach sales dollars of $625,000.

Step-by-step explanation:

To calculate the break-even point in sales dollars given fixed costs of $250,000 and a contribution margin ratio of 40%, we can apply the break-even formula: Break-even point in sales dollars = Fixed Costs / Contribution Margin Ratio.

Thus, using the provided figures: Break-even point in sales dollars = $250,000 / 0.40 = $625,000.

To break-even, the company needs to achieve $625,000 in sales dollars.