Question

g "If a product sells for $22, variable costs are $12 and fixed costs are $280,000, what would total sales have to be in order to break-even?"

Answer 1

$616,061

Step-by-step explanation:

The computation of the break even sales is shown below:

As we know that

Break even point = (Fixed expenses) ÷ (Profit volume Ratio)

where,

Contribution margin per unit = Selling price per unit - Variable expense per unit

= $22 - $12

= $10

And, Profit volume ratio = (Contribution margin per unit) ÷ (selling price per unit) × 100

So, the Profit volume ratio = (10) ÷ (22) × 100 = 45.45%

And, the fixed expenses is $280,000

Now put these values to the above formula

So, the value would equal to

= ($280,000) ÷ (45.45%)

= $616,061