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Tucker Company has the following product information: Sales price$12 per unit Contribution margin ratio40% Fixed costs$45,000What is the break-even point in sales dollars?Question 9Select one:a.$ 45,000b.$112,500c.$ 18,000d.$ 3,750

Question

Tucker Company has the following product information: Sales price12perunit Contributionmarginratio4012 per unit Contribution margin ratio40% Fixed costs45,000What is the break-even point in sales dollars?Question 9Select one:a.45,000b. 45,000b.112,500c.18,000d. 18,000d. 3,750

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Solution

The break-even point in sales dollars can be calculated by dividing the fixed costs by the contribution margin ratio.

Here's the step-by-step calculation:

  1. Identify the fixed costs and the contribution margin ratio. From the question, we know that the fixed costs are $45,000 and the contribution margin ratio is 40% or 0.40 when expressed as a decimal.

  2. Divide the fixed costs by the contribution margin ratio: 45,000/0.40=45,000 / 0.40 = 112,500

So, the break-even point in sales dollars for Tucker Company is 112,500.Therefore,thecorrectanswerisb.112,500. Therefore, the correct answer is b. 112,500.

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