The following is last month's contribution format income statement: $$\begin{array}{lc}\text{ Sales }(20,000\text{ units })& \$1,800,000\\ \text{ Less variable expenses }& 1,200,000\\ \text{ Contribution margin }& 600,000\\ \text{ Less fixed expenses }& 400,000\\ \text{ Net income }& \$200,000\end{array}$$ What is the company's break-even in sales dollars?

A) $1,800,000.
B) $1,200,000.
C) $1,600,000.
D) $0.

Contribution Margin

The amount of revenue from sales that exceeds variable costs, indicating how much contributes to covering fixed costs and generating profit.

Fixed Expenses

Costs that remain constant for a given period regardless of the level of production or sales activity, such as rent and management salaries.

Break-Even

The point at which total costs and total revenues are equal, resulting in neither profit nor loss.