Last month Angus Company had a $30,000 loss on sales of $250,000.Fixed costs are $60,000 a month.What sales revenue is needed for Angus to break even?
A)$166,667
B)$500,000
C)$280,000
D)$220,000

Question

Quizplus · Accepted Answer

To break even, sales revenue must cover both fixed and variable costs. The contribution margin ratio is 0.12 (($250,000 - $60,000 - $30,000) / $250,000). To find the break-even sales, divide fixed costs by the contribution margin ratio: $60,000 / 0.12 = $500,000.

Last Month Angus Company Had a $30,000 Loss on Sales