Question

Fixed costs are $900,000 and the variable costs are 70% of the unit selling price. What is the break-even point in dollars? A. $1,800,000 B. $2,100,000 C. $2,700,000 D. $3,000,000

Answer 1

The correct option is D,$3,000,000

Step-by-step explanation:

The break-even point in dollars =fixed costs /contribution per unit

fixed costs is $900,000

contribution per unit =selling price-variable costs

if variable cost is 70% of selling price , it implies that selling price is 100%, as a result ,contribution is 30% 0r 0.30 (100%-70%)

Break-even in dollars=$900,000/0.3

=$3,000,000

Ultimately, the break-even in dollars is $3,000,000,option D