Asked by Ariyon Powell on Apr 26, 2024
Verified
The company's overall break-even sales is closest to:
A) $94,243
B) $271,743
C) $264,685
D) $358,929
Break-even Sales
The amount of revenue needed to cover total costs, at which point a business neither makes a profit nor incurs a loss.
Overall
Pertaining to the total, aggregate, or general effect, situation, or assessment.
- Familiarize oneself with the idea of break-even analysis in the business sector.
Verified Answer
CR
CLAUDIA RISCOApr 26, 2024
Final Answer :
D
Explanation :
CM ratio = Contribution margin ÷ Sales
= $294,120 ÷ $406,000 = 0.724 (rounded)
Total fixed expenses = Total traceable fixed expenses + Common fixed expenses
= $191,000 + $69,020 = $260,020
Dollar sales to break even = Total fixed expenses ÷ CM ratio
= $260,020 ÷ 0.724 = $358,929 (using the unrounded CM ratio)
= $294,120 ÷ $406,000 = 0.724 (rounded)
Total fixed expenses = Total traceable fixed expenses + Common fixed expenses
= $191,000 + $69,020 = $260,020
Dollar sales to break even = Total fixed expenses ÷ CM ratio
= $260,020 ÷ 0.724 = $358,929 (using the unrounded CM ratio)
Learning Objectives
- Familiarize oneself with the idea of break-even analysis in the business sector.