Sales total $200,000 when variable costs total $150,000 and fixed costs total $30,000. The breakeven point in sales dollars is:
A)$200,000
B)$120,000
C)$ 40,000
D)$ 30,000

Question

Quizplus · Accepted Answer

The breakeven point in sales dollars is calculated by dividing the total fixed costs by the contribution margin ratio. The contribution margin is sales minus variable costs, which is $200,000 - $150,000 = $50,000. The contribution margin ratio is $50,000 / $200,000 = 0.25. The breakeven point is $30,000 / 0.25 = $120,000.

Sales Total $200,000 When Variable Costs Total $150,000 and Fixed