contestada

The manager at Vertical Wire Productions reported total sales revenue of $800,000. The variable expenses were $600,000, and there were $125,000 of total fixed expenses. Use the contribution margin shortcut formula to predict the breakeven point in dollars.

Respuesta :

TomShelby

Answer:

[tex]BEP_{dollars} = 500,000 [/tex]

Explanation:

The first step will be  get the contribtuion margin:

[tex]Sales\: Revenue - Variable \:Cost = Contribution \:Margin[/tex]

800,000 - 6000,000 = 200,000

This is the amount after variables cost used to pay the fixed cost and make a gain.

Second, we calcualte the contribution margin ratio

[tex]\frac{Contribution \:Margin}{Sales\: Revenue} = Contribution\: Margin\: Ratio[/tex]

200,000/800,000 = 0.25

Per dollar of sales 25 cents are available to pay the fixed cost.

Now, we calculate the break even point in dollars

[tex]\frac{Fixed\:Cost}{Contribution\: Margin \:Ratio} = Break\: Even\: Point_{dollars}[/tex]

[tex]\frac{125,000}{.025} = 500,000[/tex]

Otras preguntas