KR Sales had $1,200,000 in sales last month.The variable cost ratio was 60% and operating profits were $80,000.What is KR's break-even sales volume?
A)$800,000.
B)$1,000,000.
C)$1,200,000.
D)$2,000,000.

Question

Quizplus · Accepted Answer

Operating profits = Sales - Variable costs - Fixed costs
$80,000 = $1,200,000 - 0.6($1,200,000) - Fixed costs
$80,000 = $480,000 - Fixed costs
Fixed costs = $400,000
Break-even sales = Fixed costs / (1 - Variable cost ratio)
Break-even sales = $400,000 / (1 - 0.6)
Break-even sales = $1,000,000

KR Sales Had $1,200,000 in Sales Last Month