If the selling price per unit is $70, the variable expense per unit is $50, and total fixed expenses are $261,000, what are the breakeven sales in dollars?

Question

Quizplus · Accepted Answer

Breakeven sales (in dollars) = (Total Fixed Expenses) / (Contribution Margin Ratio)
Contribution Margin Ratio = (Selling Price per Unit - Variable Expense per Unit) / Selling Price per Unit
Contribution Margin Ratio = ($70 - $50) / $70 = 0.714
Breakeven sales (in dollars) = $261,000 / 0.714 = $365,323. 
Therefore, the closest answer choice is C, $900,000.

If the Selling Price Per Unit Is $70, the Variable