Question

A company has sales of $125,000, variable costs of $45,000 and fixed costs of $30,000. The break-even point in sales dollars is $

Answer 1

It can be deduced that the break even point of the company will be $46875.

How to calculate break even

The contribution margin will be:

= Sales - Variable cost

= $125000 - $45000

= $80000

Contribution margin rate will be:

= Contribution margin / Sales

= 80000/125000

= 0.64

Break even will be:

= 30000/0.64

= $46875

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