Answer:
B. $544,000
Explanation:
Given: Sales: $480000.
Contribution margin ratio= 25%
net loss= $16000.
Break even point: It is point in business where profit is equal to expenses of the business.
Now, finding the fixed expense.
Fixed expense= [tex]loss+ (contribution\ margin\times sales)[/tex]
⇒ Fixed expense= [tex]16000+ (0.25\times 480000)[/tex]
⇒ Fixed expense= [tex]16000+ 120000[/tex]
∴ Fixed expense= [tex]\$ 136000[/tex]
Next, computing the break even point
Sales to Break even point= [tex]\frac{Fixed\ expense}{Contribution\ margin\ ratio}[/tex]
⇒ Break even point= [tex]\frac{136000}{0.25}[/tex]
∴ Break even point= [tex]\$ 544000[/tex]
Hence, the break even point was $544000
