EM Sales had $2,200,000 in sales last month.The contribution margin ratio was 30% and operating profits were $180,000.What is EM's break-even sales volume?
A)$660,000.
B)$1,540,000.
C)$1,600,000.
D)$2,020,000.

Question

Quizplus · Accepted Answer

The contribution margin is calculated by subtracting variable costs from revenue.

Contribution Margin = Sales - Variable Costs

In this case, the contribution margin ratio is given as 30%. We can use this ratio to calculate the contribution margin:

Contribution Margin = 30% x Sales

180,000 = 30% x 2,200,000

We can solve for sales to find the break-even point:

Sales = 180,000 ÷ 0.30

Sales = $600,000

Therefore, the break-even sales volume for EM Sales is $1,600,000.

EM Sales Had $2,200,000 in Sales Last Month