Scenario 19.1 Use the following to answer the questions.
Concession Supply sells hotdogs, buns, and nacho ingredients to several major league ballparks across the country. Currently, Concession Supply has the following pricing information for one case of hotdogs sold at Wrigley Field: Total fixed costs = $1,200, Selling price = $16, and Variable costs = $6.
Refer to Scenario 19.1. What is the breakeven point in dollar sales volume?
A) $1,200
B) $1,440
C) $3,000
D) $1,920
E) $1,600

Question

Quizplus · Accepted Answer

To find the breakeven point in dollar sales volume, we can use the following formula:
Breakeven point = Fixed Costs / (Selling Price - Variable Costs)
Breakeven point = $1,200 / ($16 - $6) = $1,200 / $10 = $120
Therefore, the breakeven point in dollar sales volume is $120. To double-check, we can verify:
Profit = (Selling Price - Variable Costs) x Quantity - Fixed Costs
If we plug in $16 for selling price, $6 for variable costs, and $120 for the quantity, we get:
Profit = ($16 - $6) x 120 - $1,200 = $1,200
This means that at a quantity of 120 cases of hotdogs sold, Concession Supply will break even and make $1,200 in profit. Therefore, the correct answer is D, $1,920, which is the breakeven point multiplied by the selling price: $120 x $16 = $1,920.