The Kringel Company provides the following information: $\begin{array}{lr}
\text { Sales }(200,000 \text { units) } & \$ 500,000 \
\text { Manufacturing costs: } & \
\text { Variable } &170,000 \
\text { Fixed } & 30,000\
\text { Selling and administrative costs: } & \
\text { Variable } & 80,000 \
\text { Fixed } &20,000
\end{array}$ What is the break-even point in sales dollars for Kringel?

Question

The Kringel Company provides the following information: $\begin{array}{lr}
\text { Sales }(200,000 \text { units) } & \$ 500,000 \
\text { Manufacturing costs: } &  \
\text { Variable } &170,000 \ 
\text { Fixed } &  30,000\
\text { Selling and administrative costs: } & \
\text { Variable } & 80,000 \
\text { Fixed } &20,000 
\end{array}$ What is the break-even point in sales dollars for Kringel?

Quizplus · Accepted Answer

The break-even point in sales dollars can be calculated using the formula: 
Break-even point = Fixed costs / (1 - (Variable costs / Sales)). 
From the information given, we know the fixed costs are $50,000 and the contribution margin ratio (1 - variable costs / sales) is 40%. 
Therefore, the break-even point in sales dollars is: 
$50,000 / (1 - 0.4) = $100,000. 
Therefore, the best choice is C, $100,000.

The Kringel Company Provides the Following Information What Is the Break-Even Point in Sales Dollars for Kringel