Question

"A company sells a product for $80 per unit and has a contribution margin ratio of 45%. Fixed costs total $180,000. Sales dollar to break even equals ______.

A.$500,000
B.$400,000
C.$180,000
D.$327,273"

Answer 1

The sales dollars needed to break even in this case is $400,000.

Step-by-step explanation:

To calculate the sales dollars needed to break even, we can use the formula:

Break-even point (in dollars) = Fixed Costs / Contribution Margin Ratio

In this case, the fixed costs are $180,000 and the contribution margin ratio is 45% (or 0.45). So the break-even point is:

$180,000 / 0.45 = $400,000

Therefore, the sales dollars needed to break even is $400,000. So the answer is option B. $400,000