A company has a selling price of $300, variable costs of $180, and fixed costs of $60,000. What is the break-even sales revenue?
Practice Questions
1 question
Q1
A company has a selling price of $300, variable costs of $180, and fixed costs of $60,000. What is the break-even sales revenue?
$120,000
$100,000
$80,000
$60,000
Break-even sales revenue = Break-even units * Selling Price. Break-even units = Fixed Costs / Contribution Margin per Unit = $60,000 / ($300 - $180) = 600 units. Break-even sales revenue = 600 * $300 = $180,000.
Questions & Step-by-step Solutions
1 item
Q
Q: A company has a selling price of $300, variable costs of $180, and fixed costs of $60,000. What is the break-even sales revenue?
Solution: Break-even sales revenue = Break-even units * Selling Price. Break-even units = Fixed Costs / Contribution Margin per Unit = $60,000 / ($300 - $180) = 600 units. Break-even sales revenue = 600 * $300 = $180,000.
Steps: 4
Step 1: Identify the selling price, variable costs, and fixed costs. Here, the selling price is $300, variable costs are $180, and fixed costs are $60,000.
Step 2: Calculate the contribution margin per unit. This is done by subtracting variable costs from the selling price: Contribution Margin = Selling Price - Variable Costs = $300 - $180 = $120.
Step 3: Calculate the break-even units. This is done by dividing fixed costs by the contribution margin per unit: Break-even Units = Fixed Costs / Contribution Margin = $60,000 / $120 = 500 units.
Step 4: Calculate the break-even sales revenue. This is done by multiplying the break-even units by the selling price: Break-even Sales Revenue = Break-even Units * Selling Price = 500 * $300 = $150,000.
