Question

Lake Sales had $2,200,000 in sales last month. The contribution margin ratio was 30% and operating profits were $180,000. What is Lake's break-even sales volume

Answer 1

$1,600,000

Step-by-step explanation:

Sales

$2,200,000

Contribution margin ratio

30%

$660,000

Sales $2,200,000

Contribution margin $660,000

Operating profit $180,000

Fixed cost = Contribution margin - Operating profit

= $660,000 - $180,000

= $480,000

Break even sales = Fixed cost / Contribution margin ratio

= $480,000 / 30%

= $1,600,000

Therefore, Lake's break even sales volume is $1,600,000