What is the accounting break-even level of revenues for a firm with $6 million in sales,variable costs of $3.9 million,fixed costs of $1.2 million,and depreciation of $1 million?
A) $3,428,571
B) $6,100,000
C) $6,285,714
D) $6,557,377

Question

Quizplus · Accepted Answer

The formula for accounting break-even point is:

Fixed Costs + Depreciation / (1 - (Variable costs / Sales))

Plugging in the numbers given:

$1.2 million + $1 million / (1 - ($3.9 million / $6 million)) = $6,285,714

Therefore, the accounting break-even level of revenues is $6,285,714. The best choice is C.

What Is the Accounting Break-Even Level of Revenues for a Firm