The income statement for Darwin Co is:
Sales $150 000
Variable Expense 90 000
Contribution Margin $ 60 000
Fixed Expenses 40 000
Profit $20 000
What is the break-even point in sales dollars?

Question

Quizplus · Accepted Answer

The break-even point in sales dollars is calculated by dividing the total fixed expenses by the contribution margin ratio. The contribution margin ratio is the contribution margin divided by sales, which is $60,000 / $150,000 = 0.4. The break-even point is $40,000 / 0.4 = $100,000.

The Income Statement for Darwin Co Is