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If the total fixed costs are $12,000 and the contribution margin ratio is 40%, w
If the total fixed costs are $12,000 and the contribution margin ratio is 40%, what is the sales revenue needed to break even?
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Practice Questions
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Q1
If the total fixed costs are $12,000 and the contribution margin ratio is 40%, what is the sales revenue needed to break even?
$30,000
$40,000
$50,000
$60,000
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Break-even sales revenue = Fixed costs / Contribution margin ratio = $12,000 / 0.40 = $30,000.
Questions & Step-by-step Solutions
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Q
Q: If the total fixed costs are $12,000 and the contribution margin ratio is 40%, what is the sales revenue needed to break even?
Solution:
Break-even sales revenue = Fixed costs / Contribution margin ratio = $12,000 / 0.40 = $30,000.
Steps: 6
Show Steps
Step 1: Identify the total fixed costs, which is given as $12,000.
Step 2: Identify the contribution margin ratio, which is given as 40% (or 0.40 in decimal form).
Step 3: Use the break-even formula: Break-even sales revenue = Fixed costs / Contribution margin ratio.
Step 4: Plug in the values: Break-even sales revenue = $12,000 / 0.40.
Step 5: Calculate the result: $12,000 divided by 0.40 equals $30,000.
Step 6: Conclude that the sales revenue needed to break even is $30,000.
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