Tykee Company has the following data: Variable costs are $75 \%$ of the unit selling price The contribution margin per unit is $400. The fixed casts are $600000. Which of the following expresses the break-even point in dollars?
A).25 x 600,000 = X
B)600,000 ÷.75 = X
C)($600,000 ÷ $400)x.75 = X
D)$600,000 ÷.25 = X

Question

Quizplus · Accepted Answer

The break-even point in dollars is calculated by dividing the fixed costs by the contribution margin ratio. Since variable costs are 75% of the selling price, the contribution margin ratio is 25% (100% - 75%). Therefore, $600,000 ÷ 0.25 gives the break-even point in dollars.

Tykee Company Has the Following Data: Variable Costs Are 75%75 \%75%

Tykee Company Has the Following Data: Variable Costs Are $75 \%$