Last year,Black Company reported sales of $640,000,a contribution margin of $160,000,and a net loss of $40,000.Based on this information,the break-even point in total sales dollars was:

Question

Quizplus · Accepted Answer

Break-even point = Fixed expenses / Contribution margin ratio

In this case, we need to find the break-even point in total sales dollars, which can be calculated as follows:

Contribution margin ratio = Contribution margin / Sales

160,000 / 640,000 = 0.25

Break-even point = Fixed expenses / Contribution margin ratio

Break-even point = 40,000 / 0.25

Break-even point = $160,000

Therefore, the break-even point in total sales dollars was $640,000 / 0.25 = $800,000. So, the correct choice is C.

Last Year,Black Company Reported Sales of $640,000,a Contribution Margin of $160,000,and