Asked by Ciara Lawrence on Jun 17, 2024
Verified
A company sells a single product that has a contribution margin ratio of 28%.If the company's total fixed costs are $84,000,what is the break-even point in dollar sales?
Contribution Margin Ratio
The ratio that indicates the percentage of each sale that exceeds the variable costs, calculated by subtracting variable costs from sales revenue and dividing by sales revenue.
Fixed Costs
Fixed costs are business expenses that do not change with the level of goods or services produced, such as rent, salaries, and insurance premiums, providing stability in business planning.
Break-Even Point
The point at which total costs and total revenue are equal, meaning no net loss or gain, and one has "broken even".
- Cultivate an understanding of the concept and the specific calculations required for determining the break-even point in units and dollar sales.
Verified Answer
BO
Bella OranskyJun 24, 2024
Final Answer :
Break-even point in dollar sales = $84,000/0.28 = $300,000‾\underline{\$300,000}$300,000
Learning Objectives
- Cultivate an understanding of the concept and the specific calculations required for determining the break-even point in units and dollar sales.