Asked by Daisy Terrado on Jun 28, 2024
Verified
The company's overall break-even sales is closest to:
A) $272,067
B) $328,299
C) $114,341
D) $386,408
Break-even Sales
Break-even sales represent the amount of revenue needed to cover all fixed and variable costs, indicating the point at which a business neither makes a profit nor incurs a loss.
- Master the concept of break-even analysis for business applications.
Verified Answer
ZK
Zybrea KnightJul 04, 2024
Final Answer :
D
Explanation :
Contribution margin = Sales - Variable expenses
= $418,000 - $130,880 = $418,000
CM ratio = Contribution margin ÷ Sales
= $287,120 ÷ $418,000 = 0.687 (rounded)
Total fixed expenses = Total traceable fixed expenses + Common fixed expenses
= $186,000 + $79,420 = $265,420
Dollar sales to break even = Total fixed expenses ÷ CM ratio
= $265,420 ÷ 0.687 = $386,408 (using the unrounded CM ratio)
= $418,000 - $130,880 = $418,000
CM ratio = Contribution margin ÷ Sales
= $287,120 ÷ $418,000 = 0.687 (rounded)
Total fixed expenses = Total traceable fixed expenses + Common fixed expenses
= $186,000 + $79,420 = $265,420
Dollar sales to break even = Total fixed expenses ÷ CM ratio
= $265,420 ÷ 0.687 = $386,408 (using the unrounded CM ratio)
Learning Objectives
- Master the concept of break-even analysis for business applications.