Assume that sales are predicted to be $3,750, the expected contribution margin is $1,500, and a net loss of $250 is anticipated. The break-even point in sales dollars is:

Question

Quizplus · Accepted Answer

The formula for break-even point in sales dollars is:

Break-even sales = Fixed costs / Contribution margin ratio

We don't know the fixed costs, but we can calculate them by using the net loss:

Fixed costs = Expected contribution margin - Net loss 
Fixed costs = $1,500 - (-$250) 
Fixed costs = $1,750

Now we can calculate the break-even point:

Break-even sales = $1,750 / ($1,500 / $3,750) 
Break-even sales = $4,375

Therefore, the answer is C, $4,375.

Assume That Sales Are Predicted to Be $3,750, the Expected