Vintage Wines has fixed costs of $20000 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, Vintage Wines needs to cover its fixed costs of $20000. With variable costs at 80% of the selling price, the contribution margin is 20%. Therefore, $20000 / 0.20 = $100000 in sales is needed to break even.

Vintage Wines Has Fixed Costs of $20000 Per Year