Better Bonds provided the following data:
$$\begin{array} { l r }
\text { Sales } & \$ 540,000 \
\text { Variable costs } & \$ 378,000 \
\text { Fixed costs } & \$ 120,000 \
\text { Expected production and salesin units } & 40,000
\end{array}$$
-Refer to the Figure.What is the break-even point in sales dollars?
A)$112,500
B)$150,000
C)$171,429
D)$400,000

Question

Better Bonds provided the following data:
 $$\begin{array} { l r } 
\text { Sales } & \$ 540,000 \
\text { Variable costs } & \$ 378,000 \
\text { Fixed costs } & \$ 120,000 \
\text { Expected production and salesin units } & 40,000
\end{array}$$
-Refer to the Figure.What is the break-even point in sales dollars?
A)$112,500
B)$150,000
C)$171,429
D)$400,000

Quizplus · Accepted Answer

The break-even point in sales dollars is calculated by dividing the total fixed costs by the contribution margin ratio. Contribution margin ratio = (Sales - Variable Costs) / Sales = ($540,000 - $378,000) / $540,000 = 0.3. Break-even sales = Fixed Costs / Contribution Margin Ratio = $120,000 / 0.3 = $400,000.

Better Bonds Provided the Following Data -Refer to the Figure