Question

Assume that sales are predicted to be $3,750, the expected contribution margin is $1,500, and a net loss of $250 is anticipated. The break-even point in sales dollars is:_______.

a. $1,750b. $2,500c. $4,000d. $4,250e. $4,375

Answer 1

e. $4,375

Step-by-step explanation:

Calculation to determine what The break-even point in sales dollars is:

Using this formula

Break-even point in sales dollars=Predicted Sales+[Net loss/(Contribution margin/Sales)]

Let plug in the formula

Break-even point in sales dollars=$3,750+[$250/($1,500/$3,750)]

Break-even point in sales dollars=$3,750+($250/.40)

Break-even point in sales dollars=$3,750+$625

Break-even point in sales dollars=$4,375

Therefore The break-even point in sales dollars is:$4,375