Question

A product sells for $240 per unit, and its variable costs are 70% of sales. The fixed costs are $318,000. What is the break-even point in sales dollars?

Answer 1

The Break-Even Point in Sales Dollars will be $1,060,000

Step-by-step explanation:

Contribution Margin Ratio = 100% - Variable Cost Ratio

= 100% - 70%

= 30%

Therefore, the Break-Even Point in Sales Dollars = Total Fixed Costs / Contribution Margin Ratio

= $318,000 / 0.30

= $1,060,000

The Break-Even Point in Sales Dollars will be $1,060,000