If fixed costs are $850,000 and variable costs are 60% of sales, the break-even point (dollars) is

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Quizplus · Accepted Answer

The break-even point in dollars is calculated by dividing the fixed costs by the contribution margin ratio. The contribution margin ratio is 1 minus the variable cost ratio. Here, the variable costs are 60% of sales, so the contribution margin ratio is 1 - 0.60 = 0.40. Therefore, the break-even point is $850,000 / 0.40 = $2,125,000.

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