A company has a fixed cost of $50,000 and a contribution margin ratio of 40%. What is the breakeven point in dollars? A. $125,000 B. $100,000 C. $75,000 D. $62,500
Question
A company has a fixed cost of 125,000 B. 75,000 D. $62,500
Solution
The breakeven point in dollars can be calculated by dividing the fixed costs by the contribution margin ratio.
Here's the step-by-step calculation:
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Convert the contribution margin ratio into decimal form. In this case, 40% becomes 0.40.
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Divide the fixed costs by the contribution margin ratio.
So, 125,000
Therefore, the breakeven point in dollars is 125,000.
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