Answer:
Break-even Sales revenue =$220,600
Explanation:
Breakeven point is the level of activity that equates the total cost to the total revenue.
At the break-even point the business makes no profit and no loss.
Break-even point = Total fixed cost for the period / Contribution margin ratio
Contribution margin = total contribution/ total sales
Contribution = Fixed cost + profit
Contribution = $42,028 + $83,828
= $125,856.00
Contribution to sales ratio
= (125,856.00 /331, 200) × 100
= 38%
Break-even sales revenue = $83,828/0.38
=$220,600
Answer:
$220,600
Explanation:
Break-even point refers to the point where total costs is equal to total revenue, i.e. where there is neither loss nor profit. Therefore, break-even sales revenue refers to the level of sales revenue at which there neither profit nor loss. This can be calculated as follows:
Break-even sales revenue = TFC ÷ CMR ………………………………….. (1)
Where;
TFC = Total fixed cost = $83,828
CMR = Contribution margin ratio = Total contribution ÷ Sales revenue
Contribution = TFC + Profit on sales = $83,828 + $42,028 = $125,856
Therefore;
CRM = 125,856 ÷ 331, 200 = 0.38
Substituting the values obtained for TFC and CRM into equation (1), we have:
Break-even sales revenue = TFC ÷ CMR = $83,828 ÷ 0.38 =$220,600
Therefore, the sales revenue needed by Peggy to break even is $220,600.
