Diamonds in the Ruff sells only one product at a regular sales price of $7.50 per unit. Variable costs are 60% of sales, and fixed costs are $30,000. What is the break-even point in sales dollars?
A) $12,000
B) $18,000
C) $50,000
D) $75,000

Question

Quizplus · Accepted Answer

The break-even point in sales dollars is calculated by dividing the fixed costs by the contribution margin ratio. The contribution margin ratio is 40% (100% - 60% variable costs). So, $30,000 / 0.40 = $75,000.

Diamonds in the Ruff Sells Only One Product at a Regular