Final answer:
The break-even point for Tiller Co. is calculated by dividing fixed costs by the contribution margin ratio. The contribution margin ratio is 80%, and the break-even point in sales dollars is $57,000. so, option C is the correct answer.
Step-by-step explanation:
The calculation of Tiller Co.'s break-even point in sales dollars involves using the formula for break-even point, which is fixed costs divided by the contribution margin ratio. The contribution margin ratio is calculated by subtracting variable costs from sales and then dividing by sales.
First we calculate the contribution margin in dollars:
sales - Variable Costs = $870,000 - $174,000 = $696,000
Then, we calculate the contribution margin ratio:
Contribution Margin / Sales = $696,000 / $870,000 = 0.8 or 80%
Finally, we can find the break-even point in sales dollars by dividing the fixed costs by the contribution margin ratio:
Fixed Costs / Contribution Margin Ratio = $45,600 / 0.8 = $57,000
Therefore, the break-even point in sales dollars for Tiller Co. is $57,000.
Tiller Co.'s break-even point in sales dollars can be calculated by using the formula:
Break-even point (in sales dollars) = Fixed costs / Contribution margin ratio
The contribution margin ratio can be calculated as follows:
Contribution margin ratio = (Sales - Variable costs) / Sales
Using the provided information, the break-even point can be calculated as:
Break-even point (in sales dollars) = $45,600 / (($870,000 - $174,000) / $870,000)
Simplifying the equation, we get:
Break-even point (in sales dollars) = $45,600 / 0.8
Calculating the value, the break-even point in sales dollars is $57,000.