Zents Inc. produces and sells a single product. The selling price of the product is $240.00 per unit and its variable cost is $108.00 per unit. The fixed expense is $407,880 per month.
The break-even in monthly dollar sales is closest to:

Question

Quizplus · Accepted Answer

The break-even point in sales dollars is calculated by dividing the total fixed expenses by the contribution margin ratio. Contribution margin per unit is $240 - $108 = $132. Contribution margin ratio is $132 / $240 = 0.55. Break-even sales in dollars = $407,880 / 0.55 = $741,600.

Zents Inc Produces and Sells a Single Product