Homework Answers
1. Contribution margin ratio = (sales - variable cost)/ sales
= (560000-368000)/560000
= 34.2857
Break even sales = Fixed cost / contribution margin ratio
= 57200 / 34.2857%
= 166833
2.
| Sales | $166833 |
| Less: Variable cost (368000/560000*166833) | 109666 |
| Contribution margin | 57200 |
| Less: Fixed cost | 57200 |
| Profit | 0 |
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