A company has total fixed costs of $240000 and a contribution margin ratio of 20%. The total sales necessary to break even are
A) $960000.
B) $1200000.
C) $300000.
D) $288000.

Question

Quizplus · Accepted Answer

Break-even point can be calculated using the formula:

Break-even point = Fixed Costs / Contribution Margin Ratio

Substituting the given values:

Break-even point = $240000 / 0.20 = $1200000

Therefore, the total sales necessary to break even are $1200000.

A Company Has Total Fixed Costs of $240000 and a Contribution