Variable expenses for Alpha Corporation are 40% of sales. What are sales at the break-even point, assuming that fixed expenses total $150,000 per year:
A) $250,000
B) $375,000
C) $600,000
D) $150,000

Question

Quizplus · Accepted Answer

Variable expenses are 40% of sales, so fixed expenses are 60% of sales. At the break-even point, total expenses equal total sales. So, fixed expenses + variable expenses = sales. $150,000 + 0.40 * sales = sales0.60 * sales = $150,000sales = $150,000 / 0.60sales = $250,000

Variable Expenses for Alpha Corporation Are 40% of Sales