Learner Company sells its product for $100.It has a variable cost ratio of 70% and total fixed costs of $9,000.What is the break-even point in sales dollars for Learner Company?
A) $4,800
B) 32,000
C) $30,000
D) $8,000

Question

Quizplus · Accepted Answer

SUPPORTING CALCULATIONS:
1 - Variable Cost Ratio = Contribution Margin Ratio
Contribution margin ratio = 1 - 0.70 = 0.30
Break-Even Sales Dollars =Total Fixed Cost / Contribution Margin Ratio
Break-even sales dollars = $9,000 / 0.30 = $30,000

Learner Company Sells Its Product for $100