Tykee Company has the following data: Variable costs are 75% of the unit selling price.
The contribution margin per unit is $400.
The fixed costs are $600,000.
Which of the following expresses the break-even point in dollars?

Question

Quizplus · Accepted Answer

The break-even point in dollars is calculated by dividing the fixed costs by the contribution margin ratio. Since variable costs are 75% of the selling price, the contribution margin ratio is 25% (1 - 0.75). Therefore, the break-even point in dollars is $600,000 ÷ 0.25.

Tykee Company Has the Following Data: Variable Costs Are 75