Question

Fixed costs are $1300000 and the variable costs are 80% of the unit selling price. What is the break-even point in dollars?

Answer 1

Answer:

the break-even point in dollars is $6,500,000

Explanation:

The computation of the break even point in dollars is shown below;

As we know that

Break even point in dollars is

= Fixed cost ÷ contribution margin ratio

Since the variable cost is 80%, so the contrbibution margin is 20% so that the total selling price would be 100%

now

= $1,300,000 ÷ 20%

= $6,500,000

Hence, the break-even point in dollars is $6,500,000