Homework Answers
Breakeven point is the point at which a company is having no profit or no loss. The equation is,
Breakeven point in dollar = Fixed cost/Contribution margin ratio.
Contribution margin ratio = [( sales-variable cost) /sales] x 100
Contribution margin ratio = [ ( 200,000-140,000)/200,000] x 100
Contribution margin ratio = ( 60,000/200,000)x100
Contribution margin ratio = 30%
Breakeven point in dollar = 30,000/30%
Breakeven point in dollar = $ 100,000.
Hence, option C is the correct answer.
SUMMARY:
Breakeven point in dollars is $ 100,000. This means that when the sales revenue is $ 100,000 the company is having no profit or no loss.
Hence, option C is the correct answer.
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