Vintage Wines has fixed costs of $15,000 per year.Its warehouse sells wine with variable costs of 80% of its unit selling price.How much in sales does Vintage need to break even per year?

Question

Quizplus · Accepted Answer

To break even, total sales must cover both fixed and variable costs. If variable costs are 80% of sales, then the contribution margin is 20%. To cover $15,000 in fixed costs, sales must be $15,000 / 0.20 = $75,000.

Vintage Wines Has Fixed Costs of $15,000 Per Year