A firm has fixed operating costs of $150,000, total sales of $1,500,000, and total variable costs of$1,275,000. The firm's operating break-even point in dollars is___________ .
A) $1,425,000
B) $176,471
C) $1,000,000
D) $150,000

Question

Quizplus · Accepted Answer

The operating break-even point is calculated as Fixed Costs / (1 - Variable Cost Ratio). The Variable Cost Ratio is $1,275,000 / $1,500,000 = 0.85. Thus, the break-even point is $150,000 / (1 - 0.85) = $1,000,000.

A Firm Has Fixed Operating Costs of $150,000, Total Sales