Paxton Corp has provided the following data concerning its operations last month:
$\begin{array} { | l | r | }
\hline \text { Sales } & \$ 400,000 \
\hline \text { Variable expenses } & \$ 250,000 \
\hline \text { Fixed expenses } & \$ 100,000 \
\hline
\end{array}$Paxton Corp is a retailing organization.

-What is the break-even point in sales dollars,rounded to the nearest dollar?
A) $148,148.
B) $266,667.
C) $333,333.
D) $350,000.

Question

Paxton Corp has provided the following data concerning its operations last month:
$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 400,000 \
\hline \text { Variable expenses } & \$ 250,000 \
\hline \text { Fixed expenses } & \$ 100,000 \
\hline
\end{array}$Paxton Corp is a retailing organization.

-What is the break-even point in sales dollars,rounded to the nearest dollar?
A) $148,148.
B) $266,667.
C) $333,333.
D) $350,000.

Quizplus · Accepted Answer

The break-even point in sales dollars can be calculated using the formula: Break-even Point = Fixed Expenses / (1 - Variable Expense Ratio). The Variable Expense Ratio is Variable Expenses / Sales = $250,000 / $400,000 = 0.625. Therefore, the Break-even Point = $100,000 / (1 - 0.625) = $100,000 / 0.375 = $266,667.

Paxton Corp Has Provided the Following Data Concerning Its Operations