Marling Corporation has budgeted the following data:
Expected Sales $600,000
Variable Expenses $420,000
Fixed Expenses $120,000
What is the break-even in sales dollars?
A) $400,000.
B) $420,000.
C) $540,000.
D) $660,000.

Question

Quizplus · Accepted Answer

The break-even point in sales dollars can be calculated using the formula: Break-even Sales = Fixed Expenses / (1 - Variable Cost Ratio), where Variable Cost Ratio = Variable Expenses / Sales. Here, Variable Cost Ratio = $420,000 / $600,000 = 0.7. Therefore, Break-even Sales = $120,000 / (1 - 0.7) = $120,000 / 0.3 = $400,000.

Marling Corporation Has Budgeted the Following Data