A company has a selling price of $300, variable costs of $180, and fixed costs o

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Question: 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?

Options:

$120,000
$100,000
$80,000
$60,000

Correct Answer: $120,000

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.

A company has a selling price of $300, variable costs of $180, and fixed costs o

Practice Questions

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

Questions & Step-by-Step Solutions

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?

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.

Break-even Analysis – Understanding how to calculate the break-even point in terms of units and sales revenue based on fixed and variable costs.
Contribution Margin – Calculating the contribution margin per unit to determine how much each unit sold contributes to covering fixed costs.

A company has a selling price of $300, variable costs of $180, and fixed costs o

What’s inside this PDF?

A company has a selling price of $300, variable costs of $180, and fixed costs o

Practice Questions

Questions & Step-by-Step Solutions

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