Sabv Corporation's break-even-point in sales is $990,000, and its variable expenses are 75% of sales. If the company lost $49,000 last year, sales must have amounted to:

Question

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The formula for calculating the break-even-point is:

Break-even-point = Fixed expenses / (Sales price per unit - Variable expenses per unit)

We know that the break-even-point is $990,000, so we can set up the equation:

$990,000 = Fixed expenses / (1 - 0.75)

Simplifying this, we get:

Fixed expenses = $247,500

We also know that the company lost $49,000 last year, which means that their total expenses exceeded their total revenue. We can use this information to calculate their total expenses:

Total expenses = Total revenue - Net income
Total expenses = Total revenue - (-$49,000)
Total expenses = Total revenue + $49,000

Since we know that variable expenses are 75% of sales, we can set up the equation:

Total expenses = Variable expenses + Fixed expenses

Substituting in the values we know, we get:

Total revenue + $49,000 = 0.75(Sales) + $247,500

Simplifying this, we get:

Total revenue = 0.75(Sales) - $196,500

We can now solve for sales:

0.75(Sales) - $196,500 = Total revenue
0.75(Sales) - $196,500 = Total revenue + $49,000
0.75(Sales) = Total revenue + $245,500
Sales = (Total revenue + $245,500) / 0.75

Substituting in the values we know, we get:

Sales = ($794,000) / 0.75

Therefore, the company's sales must have amounted to $794,000.

Sabv Corporation's Break-Even-Point in Sales Is $990,000, and Its Variable