A product sells for $200 per unit, and its variable costs are 65% of sales. The fixed costs are $420,000. What is the break-even point in sales dollars?
A) $2,100.
B) $1,200,000.
C) $420,000.
D) $646,154.
E) $6,000.

Question

Quizplus · Accepted Answer

The break-even point in sales dollars is calculated by dividing the fixed costs by the contribution margin ratio. The contribution margin ratio is 35% (100% - 65% variable costs). Therefore, $420,000 / 0.35 = $1,200,000.

A Product Sells for $200 Per Unit, and Its Variable