The following data are available for the Phelps Corporation for a recent month: The break-even sales for the month for the company is closest to:
A)$91,667
B)$203,000
C)$148,000
D)$137,500

Question

The following data are available for the Phelps Corporation for a recent month:  The break-even sales for the month for the company is closest to:
A)$91,667 
B)$203,000 
C)$148,000 
D)$137,500

Quizplus · Accepted Answer

CM ratio = Contribution margin ÷ Sales
= $148,000 ÷ $370,000 = 0.4
 
Dollar sales to break even = Fixed expenses ÷ CM ratio
= $55,000 ÷ 0.4 = $137,500

The Following Data Are Available for the Phelps Corporation for a Recent