Solen Corporation's break-even-point in sales is $900,000, and its variable expenses are 75% of sales. If the company lost $32,000 last year, sales must have amounted to:
A)$868,000
B)$804,000
C)$772,000
D)$628,000

Question

Quizplus · Accepted Answer

Let's use the formula to find out the break-even-point:

Break-even-point = Fixed costs / (1 - (Variable costs / Sales))

We know that the break-even-point is $900,000, therefore:

$900,000 = Fixed costs / (1 - 0.75)

$900,000 = Fixed costs / 0.25

Fixed costs = $225,000

Now we can use the formula to find out the sales:

Sales = (Variable costs x Sales) + Fixed costs - Profit

We know that the variable expenses are 75% of sales, therefore:

Sales = (0.75 x Sales) + $225,000 - $32,000

Simplifying the equation:

0.25 x Sales = $193,000

Sales = $772,000

Therefore, the answer is C) $772,000.

Solen Corporation's Break-Even-Point in Sales Is $900,000, and Its Variable