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The following information for a company is given: Fixed cost per month $2,500 Unit selling price 100 Variable cost as a percentage of sales 60% What amount of annual sales must the company achieve to break even

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Zviko

Answer:

$6,250

Explanation:

Break even Point = Fixed Cost ÷ Contribution Margin ratio

where,

Contribution Margin ratio = Contribution ÷ Sales

                                           = ($100 - $60) ÷ $100

                                           = 0.40

Break even Point = $2,500 ÷ 0.40 = $6,250

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