ABC Bread sells a box of bagels with a contribution margin of 62.5%.Its fixed costs are $150,000 per year.How many sales dollars does ABC Bread need to break even per year if bagels are its only product?

Question

Quizplus · Accepted Answer

To calculate the break-even point, we need to use the formula:
Break-even point (in sales dollars) = Fixed costs / Contribution margin ratio

Contribution margin ratio = 62.5% = 0.625
Fixed costs = $150,000

Break-even point = $150,000 / 0.625 = $240,000

Therefore, answer choice C is the best choice.

ABC Bread Sells a Box of Bagels with a Contribution