Question

Calculate the break even sales dollars if the fixed expenses are $7,000 and the contribution ratio is 40%.

Answer 1

Break even sales = $17,500 (Approx.)

Explanation:

Given:

Fixed expenses = $7,000

Contribution ratio = 40%

Find:

Break even sales dollars

Computation:

Break even sales = Fixed expenses / Contribution ratio

Break even sales = 7,000 / 40%

Break even sales = 7,000 / 0.40

Break even sales = 17,500

Break even sales = $17,500 (Approx.)