Ace Corporation's variable costs are equal to 43% of sales revenue. Their fixed costs per month are $600,000. Calculate total revenue at the break-even point.
A) $1,395,349
B) $858,000
C) $942,000
D) $1,052,632
E) $1,355,400

Question

Quizplus · Accepted Answer

At the break-even point, total costs (variable + fixed) equal total revenue. Variable costs are 43% of sales, so contribution margin is 57% of sales. To find the break-even revenue, divide fixed costs by the contribution margin percentage: $600,000 / 0.57 = $1,052,632.

Ace Corporation's Variable Costs Are Equal to 43% of Sales