South Company sells a single product for $20 per unit.If variable expenses are 60% of sales and fixed expenses total $9,600,the break-even point will be:
A)$24,000
B)$14,400
C)$9,600
D)$16,000

Question

Quizplus · Accepted Answer

CM ratio = 1 - Variable expense ratio
CM ratio = 1 - 0.60 = 0.40
Dollar sales to break even = Fixed expenses F1F1F1S1F1F1F10 CM ratio
=$9,600 F1F1F1S1F1F1F10 0.40 = $24,000

South Company Sells a Single Product for $20 Per Unit