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 A?
A)$208,333.
B)$312,500.
C)$325,000.
D)Cannot determine with the information given.

Question

Quizplus · Accepted Answer

To calculate the breakeven sales volume for Store A, we need to use the following formula:

Total Costs = Fixed Costs / (1 - Variable Cost Ratio)

Total Costs = $125,000 / (1 - 0.60)

Total Costs = $125,000 / 0.40

Total Costs = $312,500

Therefore, the breakeven sales volume for Store A is $312,500. The answer is B.

Acme Sales Has Two Store Locations