Putnam Company
Below is an income statement for Putnam Company:
Sales $ 600,000
Variable costs $\underline{\$150,000}$
Contribution margin $ \$ 450,000 $
Fixed costs $\underline{(300,000)}$
Profit before taxes $\underline{\$150,000}$

Refer to Putnam Company.Based on the cost and revenue structure on the income statement,what was Putnam's break-even point in dollars?

Question

Putnam Company
Below is an income statement for Putnam Company:
Sales                                                       $ 600,000 
Variable costs                                         $\underline{\$150,000}$
Contribution margin                               $ \$ 450,000 $ 
Fixed costs                                              $\underline{(300,000)}$
Profit before taxes                                    $\underline{\$150,000}$

Refer to Putnam Company.Based on the cost and revenue structure on the income statement,what was Putnam's break-even point in dollars?

Quizplus · Accepted Answer

The break-even point is the point where the company's revenues equal its total costs (both fixed and variable costs).

To calculate the break-even point in dollars, we can use the formula:

Break-even point = Fixed costs / Contribution margin ratio

Contribution margin ratio is the contribution margin divided by total sales.

In this case, we have:

Fixed costs = $300,000 
Contribution margin = $450,000 
Total sales = $600,000

Contribution margin ratio = $450,000 / $600,000 = 0.75

Break-even point = $300,000 / 0.75 = $400,000

Therefore, the answer is B) $400,000.

Putnam Company Below Is an Income Statement for Putnam Company $150,000‾\underline{\$150,000}$150,000​

Putnam Company
Below Is an Income Statement for Putnam Company $\underline{\$150,000}$