The selling price of a Road King bicycle is $800, unit variable costs are $450 and total fixed costs are $10,150. What are breakeven sales in dollars?

Question

Quizplus · Accepted Answer

The breakeven point in sales dollars is calculated by dividing the total fixed costs by the contribution margin ratio. The contribution margin per unit is the selling price minus the variable cost ($800 - $450 = $350). The contribution margin ratio is $350/$800 = 0.4375. The breakeven sales in dollars is $10,150 / 0.4375 = $23,200.

The Selling Price of a Road King Bicycle Is $800