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g "If a product sells for $22, variable costs are $12 and fixed costs are $280,000, what would total sales have to be in order to break-even?"

Respuesta :

Answer:

$616,061

Explanation:

The computation of the break even sales is shown below:

As we know that

Break even point = (Fixed expenses) ÷ (Profit volume Ratio)  

where,  

Contribution margin per unit = Selling price per unit - Variable expense per unit  

= $22 - $12

= $10

And, Profit volume ratio = (Contribution margin per unit) ÷ (selling price per unit) × 100

So, the Profit volume ratio = (10) ÷ (22) × 100 = 45.45%

And, the fixed expenses is $280,000

Now put these values to the above formula  

So, the value would equal to  

= ($280,000) ÷ (45.45%)  

= $616,061

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