If a product has a selling price of $100, variable costs of $60, and fixed costs

If a product has a selling price of $100, variable costs of $60, and fixed costs of $10, what is the break-even point in sales dollars?

If a product has a selling price of $100, variable costs of $60, and fixed costs of $10, what is the break-even point in sales dollars?

Step 1: Identify the selling price of the product, which is $100.
Step 2: Identify the variable costs associated with the product, which are $60.
Step 3: Calculate the contribution margin by subtracting variable costs from the selling price: $100 - $60 = $40.
Step 4: Calculate the contribution margin ratio by dividing the contribution margin by the selling price: $40 / $100 = 0.4.
Step 5: Identify the fixed costs, which are $10.
Step 6: Calculate the break-even point in sales dollars by dividing fixed costs by the contribution margin ratio: $10 / 0.4 = $25.
Step 7: To find the break-even point in sales dollars, multiply the break-even sales by the selling price: $25 * $100 = $2500.

Break-even Analysis – Understanding how to calculate the break-even point using fixed costs, variable costs, and selling price.
Contribution Margin – Calculating the contribution margin to determine how much revenue contributes to covering fixed costs.
Contribution Margin Ratio – Understanding the ratio of contribution margin to selling price to find the break-even point in sales dollars.