Clean Company sells its product for $80.In addition,it has a variable cost ratio of 60 percent and total fixed costs of $8,000.What is the break-even point in sales dollars for Baker Company?

Question

Quizplus · Accepted Answer

The break-even point is the level of sales at which total revenue equals total costs.

Let X be the break-even point in sales dollars. Then we can set up the following equation:

0.4X = 8000

(1 - 0.6)X = 8000

0.4X = 8000

X = 20000

Therefore, the break-even point in sales dollars for Clean Company is $20,000. Choice C is the correct answer.

Clean Company Sells Its Product for $80