Use the following information to determine the break-even point in sales dollars:$\begin{array} { l c }
\text { Unit sales } & 50,000 \text { Units } \
\text { Dollar sales } & \$ 500,000 \
\text { Fixed costs } & \$ 204,000 \
\text { Variable costs } & \$ 187,500
\end{array}$
A) $326,400.
B) $108,500.
C) $500,000.
D) $173,600.
E) $88,500.

Question

Use the following information to determine the break-even point in sales dollars:$\begin{array} { l c } 
\text { Unit sales } & 50,000 \text { Units } \
\text { Dollar sales } & \$ 500,000 \
\text { Fixed costs } & \$ 204,000 \
\text { Variable costs } & \$ 187,500
\end{array}$
A) $326,400.
B) $108,500.
C) $500,000.
D) $173,600.
E) $88,500.

Quizplus · Accepted Answer

The break-even point in sales dollars is calculated as Fixed Costs / Contribution Margin Ratio. Contribution Margin Ratio = (Sales - Variable Costs) / Sales = ($500,000 - $187,500) / $500,000 = 0.625. Break-even point = $204,000 / 0.625 = $326,400.

Use the Following Information to Determine the Break-Even Point in Sales