The following data are available for the Phelps Corporation for a recent month:
The break-even sales for the month for the company is closest to:
A) $91,667
B) $203,000
C) $148,000
D) $137,500

Question

The following data are available for the Phelps Corporation for a recent month:
 The break-even sales for the month for the company is closest to:
A) $91,667 
B) $203,000 
C) $148,000 
D) $137,500

Quizplus · Accepted Answer

CM ratio = Contribution margin ÷ Sales
= $148,000 ÷ $370,000 = 0.4
Dollar sales to break even = Fixed expenses ÷ CM ratio
= $55,000 ÷ 0.4 = $137,500

The Following Data Are Available for the Phelps Corporation for a Recent