Answer:
Break-even sales = $800,000.
Step-by-step explanation:
The beak-even point is the units of products to be sold or number of customers to be served to enable a business to cover exactly its total cost from the revenue. At the break-even point, the business makes no profit or no loss because the contribution from sales exactly equals the total fixed cost
Break-even in sales revenue = Total fixed cost/Contribution margin
Contribution margin (%) = Contribution/ sales × 100
= 160,000/640,000
= 0.25 × 100
= 25%
Fixed cost = Contribution - operating income
= 160,000- -( 40,000)
= 160,000 + 40,000
= 200,000
Break-even point sales = 200,000/25%
= $800,000.