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Company A's fixed costs were $135,000, its variable costs were $72,000, and its sales were $288,000
Company A's fixed costs were $135,000, its variable costs were $72,000, and its sales were $288,000. What is the company's break-even point in sales?
A) $135,000
B) $180,000
C) $253,125
D) $288,000
E) None of the above
Expert Solution
Computation of the break even point in sales:-
Contribution margin ratio = (Selling price - Variable cost) / Selling price
= ($288,000 - $72,000) / $288,000
= $216,000 / $288,000
= 75%
Break even point in sales = Fixed costs / Contribution margin ratio
= $135,000 / 75%
= $180,000
Hence, the correct option is B) $180,000
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