Variable expenses of Charlie Limited constitute 40% of sales value and its fixed expenses are $90 000. What is the break-even point in terms of sales dollars?

Question

Quizplus · Accepted Answer

The break-even point in sales dollars can be calculated using the formula: Break-even point = Fixed expenses / (1 - Variable expense ratio). Here, the variable expense ratio is 40% or 0.4, so the calculation is $90,000 / (1 - 0.4) = $90,000 / 0.6 = $150,000.

Variable Expenses of Charlie Limited Constitute 40% of Sales Value