If fixed costs are $750,000 and variable costs are 60% of sales, what is the break-even point in sales dollars?
A) $1,250,000
B) $450,000
C) $1,875,000
D) $300,000

Question

Quizplus · Accepted Answer

Break-even point in sales dollars = (Fixed Costs) / (1 - Variable Costs as a percentage of sales)

Variable costs as a percentage of sales = 60% = 0.6

Break-even point in sales dollars = 750,000 / (1 - 0.6) = $1,875,000

Therefore, the best choice is C.

If Fixed Costs Are $750,000 and Variable Costs Are 60