Question

Coronado Industries is planning to sell 750000 units for $1.50 per unit. The contribution margin ratio is 20%. If Coronado will break even at this level of sales, what are the fixed costs

Answer 1

Answer:

$225,000

Explanation:

the break even formula = total fixed costs / contribution margin

• break even in units = 750,000 units
• contribution margin = 20% x $1.50 = $0.30

750,000 units = total fixed costs / $0.30

750,000 units x $0.30 = total fixed costs

total fixed costs = $225,000