Question

If fixed costs are $821,000 and variable costs are 63% of sales, what is the break-even point in sales dollars

Answer 1

Break-even point (dollars)= $2,218,919

Step-by-step explanation:

Giving the following information:

Fixed costs= $821,000

Variable costs rate= 63%

If the variable cost rate is 63%, then the contribution margin rate is:

Contribution margin ratio= 1 - 0.63

Contribution margin ratio= 0.37

Now, the break-even point in sales revenue:

Break-even point (dollars)= fixed costs/ contribution margin ratio

Break-even point (dollars)= 821,000 / 0.37

Break-even point (dollars)= $2,218,919