Maruca Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. The break-even point in dollar sales is closest to:

A) $175,500
B) $261,600
C) $246,000
D) $0

Question

Maruca Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range.

The break-even point in dollar sales is closest to:

A) $175,500
B) $261,600
C) $246,000
D) $0

Jacob Georgen · Accepted Answer

Final Answer : C, Explanation :  The break-even point in dollar sales can be calculated as follows:Break-even point = (Fixed expenses) / (Contribution margin ratio)Contribution margin ratio = (Total sales - Variable expenses) / Total salesFrom the given information,Total sales = $600,000Variable expenses = $336,000Contribution margin = ($600,000 - $336,000) = $264,000Contribution margin ratio = ($264,000 / $600,000) = 0.44Fixed expenses = $88,000 + $54,000 + $36,000 = $178,000Break-even point = ($178,000) / (0.44) = $405,000Hence, the closest break-even point in dollar sales is option C) $246,000.

Maruca Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. The break-even point in dollar sales is closest to:

A) $175,500
B) $261,600
C) $246,000
D) $0

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Learning Objectives

Related questions

Maruca Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. The break-even point in dollar sales is closest to:A) $175,500B) $261,600C) $246,000D) $0

Definitions

Learning Objectives

Learning Objectives

Related questions

Maruca Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. The break-even point in dollar sales is closest to:

A) $175,500
B) $261,600
C) $246,000
D) $0