Susan Co. has total variable costs equal to 40% of sales. Fixed costs are $120,000. What is the breakeven point in revenues?
A) $300,000
B) $200,000
C) $120,000
D) Cannot be determined

Question

Quizplus · Accepted Answer

The breakeven point in revenues can be calculated using the formula:

Breakeven point = Fixed costs / (1 - Variable costs as a percentage of sales)

Plugging in the given values, we get:

Breakeven point = $120,000 / (1 - 0.40) = $200,000

Susan Co Has Total Variable Costs Equal to 40% of Sales