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

Question

Quizplus · Accepted Answer

To break-even, ABC Bread needs to cover its fixed costs with its contribution margin. 
Let x be the sales in dollars:
Contribution margin * x = Fixed costs
0.625 * x = 150,000
x = 150,000/0.625
x = $240,000 
Therefore, ABC Bread needs $240,000 in sales to break-even per year.

ABC Bread Sells a Box of Bagels with a Contribution