If fixed costs are $850,000 and variable costs are 60% of sales, what is the break-even point (dollars)?
A) $2,125,000
B) $340,000
C) $3,400,000
D) $1,416,666

Question

Quizplus · Accepted Answer

To find the break-even point in dollars, you use the formula: Break-even point = Fixed Costs / (1 - Variable Cost Percentage). Here, the variable cost percentage is 60% or 0.6. So, the calculation is $850,000 / (1 - 0.6) = $850,000 / 0.4 = $2,125,000.

If Fixed Costs Are $850,000 and Variable Costs Are 60