Question

If a company has sales of 13,150,000, fixed costs of 2,780,000 and a contribution margin of 5,540,000 what is its breakeven revenue? Put your answer to two decimal places do not use a dollar sign

Answer 1

The breakeven revenue for the company, when fixed costs are $2,780,000 and contribution margin is $5,540,000 on sales of $13,150,000, is $6,597,243.05.

Step-by-step explanation:

To calculate the breakeven revenue for a company, we need to understand that breakeven point is where total costs equal total sales revenue, resulting in no profit or loss. The fixed costs are given as $2,780,000, and the contribution margin ratio can be calculated by dividing the contribution margin by sales. In this case, the contribution margin ratio is $5,540,000 divided by $13,150,000 sales, which equals 0.4213. To compute breakeven revenue, we divide the fixed costs by the contribution margin ratio: $2,780,000 / 0.4213 = $6,597,243.05.

Therefore, the breakeven revenue for the company is $6,597,243.05.