A firm has fixed operating costs of $150,000,total sales of $1,500,000,and total variable costs of $1,275,000.The firm's operating breakeven point in dollars is
A)$150,000
B)$176,471
C)$1,000,000
D)$1,425,000

Question

Quizplus · Accepted Answer

The operating breakeven point is calculated as Fixed Costs / (1 - Variable Cost Ratio). The Variable Cost Ratio is $1,275,000 / $1,500,000 = 0.85. Therefore, the breakeven point is $150,000 / (1 - 0.85) = $1,000,000.

A Firm Has Fixed Operating Costs of $150,000,total Sales of $1,500,000,and