The break-even point in dollar sales is closest to:

A) $175,500
B) $261,600
C) $246,000
D) $0

Question

The break-even point in dollar sales is closest to:A) $175,500B) $261,600C) $246,000D) $0

Keenan Lassor · Accepted Answer

Final Answer : C, Explanation :  The break-even point in sales dollars can be calculated using the formula: Break-even point (in dollars) = Fixed costs / (1 - (Variable costs / Sales)).From the given information, we have:Fixed costs = $246,000Variable costs = $30,000 + 0.7(Sales)Profit = 0 (at Break-even point)Substituting these values in the formula, we get:Break-even point (in dollars) = $246,000 / (1 - (0.7(Sales) / Sales))Simplifying this, we get:Break-even point (in dollars) = $246,000 / (0.3)Break-even point (in dollars) = $820,000 / 3Break-even point (in dollars) = $273,333.33Therefore, the closest option is C) $246,000. CM ratio = Contribution margin ÷ Sales = $94,500 ÷ $270,000 = 35%Dollar sales to break even = Fixed expenses ÷ CM ratio = $86,100 ÷ 35% = $246,000

The break-even point in dollar sales is closest to:

A) $175,500
B) $261,600
C) $246,000
D) $0

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