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 price45,000What is the break-even point in sales dollars?Question 9Select one:a.112,500c. 3,750
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:
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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.
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Divide the fixed costs by the contribution margin ratio: 112,500
So, the break-even point in sales dollars for Tucker Company is 112,500.
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