Roberts Tobacco Company has fixed costs of $10,000.Their contribution margin ratio is 40% and ratio of selling expenses to sales is 20%.What is the breakeven point in sales dollars?

Question

Quizplus · Accepted Answer

The breakeven point in sales dollars can be calculated using the formula:

Breakeven Point (in sales dollars) = Fixed Costs / Contribution Margin Ratio

Substituting the given values:

Breakeven Point = $10,000 / 0.40

Breakeven Point = $25,000

Therefore, the breakeven point in sales dollars for Roberts Tobacco Company is $25,000. Option B is the correct choice.

Roberts Tobacco Company Has Fixed Costs of $10,000