Data concerning Kuralt Corporation's single product appear below: The break-even in monthly dollar sales is closest to:
A)$310,860
B)$1,195,920
C)$420,200
D)$642,400

Question

Data concerning Kuralt Corporation's single product appear below:  The break-even in monthly dollar sales is closest to:
A)$310,860 
B)$1,195,920 
C)$420,200 
D)$642,400

Quizplus · Accepted Answer

The break-even point is where total revenue equals total costs (fixed and variable). 
Break-even in units = fixed costs / contribution margin per unit 
Break-even in dollars = fixed costs / contribution margin ratio

From the given data: 
Fixed costs = $504,000 
Contribution margin per unit = $720 - $480 = $240 
Contribution margin ratio = ($240 / $720) = 1/3

Break-even in units = $504,000 / $240 = 2,100 units 
Break-even in dollars = $504,000 / (1/3) = $1,512,000

Therefore, the closest answer choice is C) $420,200.

Data Concerning Kuralt Corporation's Single Product Appear Below: the Break-Even