Kent Coffee Shoppe total sales revenue is $850,000, its variable expenses total $250,000, and its fixed expenses total $375,000

Accounting Feb 23, 2021

Kent Coffee Shoppe total sales revenue is $850,000, its variable expenses total $250,000, and its fixed expenses total $375,000. Compute the overall contribution margin ratio and use the contribution margin ratio in the shortcut formula to predict the breakeven point in dollars.

Sales revenue	$850,000
Less: Variable expenses	$250,000
Contribution margin

Expert Solution

Answer: Contribution Margin: $850,000 - $250,000 = $600,000

$600,000 / $850,000 = 70.58 ~ 71%

Sales in dollars = $375,000 + 0 / .71 = $528.169.01

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