If fixed costs are $200 000 and variable costs are 60% of the selling price,the break-even point in sales dollars is:
A) $800 000
B) $333 333
C) $200 000
D) $500 000

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 1 - variable cost ratio, which is 1 - 0.60 = 0.40. Therefore, the break-even point is $200,000 / 0.40 = $500,000.

If Fixed Costs Are $200 000 and Variable Costs Are