Question

Use the following information to determine the break-even point in sales dollars:

Unit sales 50,000
Units Dollar sales $500,000
Fixed costs $204,000
Variable costs $187,500
a. $500,000.
b. $173,600.
c. $108,500.
d. $88,500.
e. $326,400.

Answer 1

Break-even point (dollars)= $362,400

Step-by-step explanation:

Giving the following information:

Unit sales 50,000

Units Dollar sales $500,000

Fixed costs $204,000

Variable costs $187,500

First, we need to calculate the contribution margin ratio:

Contribution margin ratio= total CM / Sales

Contribution margin ratio= (500,000 - 187,500) / 500,000

Contribution margin ratio= 0.625

Now, the break-even point in sales dollars:

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 204,000 / 0.625

Break-even point (dollars)= $362,400