What is the break-even point in sales dollars if the fixed costs are $100,000 and the contribution margin ratio is 40%?
Practice Questions
1 question
Q1
What is the break-even point in sales dollars if the fixed costs are $100,000 and the contribution margin ratio is 40%?
$250,000
$400,000
$100,000
$150,000
Break-even point in sales dollars = Fixed Costs / Contribution Margin Ratio = $100,000 / 0.40 = $250,000.
Questions & Step-by-step Solutions
1 item
Q
Q: What is the break-even point in sales dollars if the fixed costs are $100,000 and the contribution margin ratio is 40%?
Solution: Break-even point in sales dollars = Fixed Costs / Contribution Margin Ratio = $100,000 / 0.40 = $250,000.
Steps: 6
Step 1: Identify the fixed costs. In this case, the fixed costs are $100,000.
Step 2: Identify the contribution margin ratio. Here, the contribution margin ratio is 40%, which can be written as 0.40.
Step 3: Use the formula to find the break-even point in sales dollars. The formula is: Break-even point in sales dollars = Fixed Costs / Contribution Margin Ratio.
Step 4: Plug in the values into the formula: Break-even point in sales dollars = $100,000 / 0.40.
Step 5: Calculate the result: $100,000 divided by 0.40 equals $250,000.
Step 6: Conclude that the break-even point in sales dollars is $250,000.
