If fixed costs are $750,000 and variable costs are 60% of sales, what is the break-even point (in dollars)?
A) $1,875,000
B) $1,250,000
C) $1,666,667
D) $1,350,000

Question

Quizplus · Accepted Answer

The break-even point in dollars is calculated by dividing the fixed costs by the contribution margin ratio. The contribution margin ratio is 1 minus the variable cost percentage (1 - 0.60 = 0.40). Therefore, the break-even point is $750,000 / 0.40 = $1,875,000.

If Fixed Costs Are $750,000 and Variable Costs Are 60