Asked by Martha Renteria on Jul 01, 2024
Verified
The company's overall break-even sales is closest to:
A) $412,564
B) $506,409
C) $518,750
D) $106,186
Break-Even Sales
The amount of revenue required to cover both the variable and fixed costs of a business, indicating no profit and no loss.
- Comprehend the concept and calculation of break-even sales for a company or its divisions.
Verified Answer
YZ
Yasides Zapolski7 days ago
Final Answer :
C
Explanation :
CM ratio = Contribution margin ÷ Sales
= $361,330 ÷ $522,000 = 0.692 (rounded)
Total fixed expenses = Total traceable fixed expenses + Common fixed expenses
= $286,000 + $73,080 = $359,080
Dollar sales to break even = Total fixed expenses ÷ CM ratio
= $359,080 ÷ 0.692 = $518,750 (using the unrounded CM ratio)
= $361,330 ÷ $522,000 = 0.692 (rounded)
Total fixed expenses = Total traceable fixed expenses + Common fixed expenses
= $286,000 + $73,080 = $359,080
Dollar sales to break even = Total fixed expenses ÷ CM ratio
= $359,080 ÷ 0.692 = $518,750 (using the unrounded CM ratio)
Learning Objectives
- Comprehend the concept and calculation of break-even sales for a company or its divisions.
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