Question

What is the break-even sales dollars if total fixed costs are $35,000?

Answer 1

The break-even sales dollars can be calculated by dividing the total fixed costs by the contribution margin ratio.

Step-by-step explanation:

The break-even sales dollars can be calculated by dividing the total fixed costs by the contribution margin ratio. The contribution margin ratio is calculated by subtracting the variable costs from the revenue and then dividing by the revenue.

In this case, the revenue is $20,000 and the variable costs are $15,000. So, the contribution margin is $20,000 - $15,000 = $5,000. To find the break-even sales dollars, we divide the total fixed costs of $35,000 by the contribution margin ratio of $5,000, which gives us 7 units.

Therefore, the break-even sales dollars is $20,000 x 7 = $140,000.