The break-even in monthly dollar sales is closest to:

Question

Quizplus · Accepted Answer

The break-even point can be calculated by dividing the total fixed costs by the contribution margin ratio (the difference between the selling price and variable cost). 
Total fixed costs = $605,000 
Selling price = $70 
Variable cost per unit = $42 
Contribution margin per unit = $28 
Contribution margin ratio = $28/$70 = 0.4 
Break-even in units = $605,000/0.4($28) = 17,125 units 
Break-even in dollars = 17,125($70) = $1,198,750 
The closest answer to this is C) $420,200.

The Break-Even in Monthly Dollar Sales Is Closest To