Artis Sales has two store locations. Store A has fixed costs of $125,000 per month and a variable cost ratio of 60%. Store B has fixed costs of $200,000 per month and a variable cost ratio of 30%. What is the break-even sales volume for Store A?
A) $208,333.
B) $312,500.
C) $325,000.
D) Cannot determine with the information given.

Question

Quizplus · Accepted Answer

The break-even sales volume is calculated by dividing the fixed costs by the contribution margin ratio (1 - variable cost ratio). For Store A, this is $125,000 / (1 - 0.60) = $312,500.

Artis Sales Has Two Store Locations