Acme Sales has two store locations.Store A has fixed costs of $125,000 per month and a variable cost ratio of 60%.Store B has fixed costs of $200,000 per month and a variable cost ratio of 30%.What is the break-even sales volume for Store B?
A)$666,667.
B)$325,000.
C)$285,714.
D)Cannot determine with the information given.

Question

Quizplus · Accepted Answer

To find the break-even sales volume for Store B, we need to use the formula:
Break-even sales volume = Fixed costs / Contribution margin ratio

For Store B, fixed costs are $200,000 and variable cost ratio is 30%, which means contribution margin ratio is 70% (100% - 30%).

Therefore, break-even sales volume = $200,000 / 70% = $285,714.

Thus, the answer is C.

Acme Sales Has Two Store Locations