The Sweet Factory produces and sells specialty fudge.The selling price per pound is $20,variable costs are $12 per pound,and total fixed costs are $6,000.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 pound is $20 - $12 = $8. The contribution margin ratio is $8 / $20 = 0.4. Therefore, breakeven sales in dollars = $6,000 / 0.4 = $15,000.

The Sweet Factory Produces and Sells Specialty Fudge