Fixed costs of $10,000 divided by the contribution margin ratio of 40% would yield the dollar amount of break-even sales as $25,000.

Question

Quizplus · Accepted Answer

The formula for calculating break-even sales is as follows:

Break-even Sales = Fixed Costs / Contribution Margin Ratio

Using the given information, we can substitute the values and solve for the break-even sales as follows:

Break-even Sales = $10,000 / 40%

Break-even Sales = $25,000

Therefore, the statement is true - the dollar amount of break-even sales is $25,000.

Fixed Costs of $10,000 Divided by the Contribution Margin Ratio