Question

If a business had sales of $3,974,000 and a margin of safety of 20%, the break-even point in sales dollars was

Answer 1

If the business had total sales of $3,974,000 and a margin of safety of 20%, the break-even point in sales dollars is $3,179,200.

What do you mean by the Break-even point?

The break-even point refers to the point where the total revenue equals the total cost.

In other words, it is the point where there is no loss and no profit.

Calculating the break-even point in sales dollars

$\begin{aligned}\text{Breakeven Point}&=\text{Total Sales-Margin of Safety}\\\\&=\ 3,974,000- 794,800\\&=\ 3,179,200\end{aligned}$

Therefore, the break-even point in sales dollars is $3,179,200.

Learn more about the Break-even point here:

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