The following information pertains to Tiller Co.: Sales $ 770,000 Variable Costs 154,000 Fixed Costs 37,600...

Question

Question

The following information pertains to Tiller Co.:

What is Tiller's break-even point in sales dollars? (CPA adapted)

Multiple Choice

Answer 1

Answer #1

The Break even point in Sales Dollars can be calculated by dividing a company's fixed expenses by the company's contribution margin ratio.

Solution:

The correct option is, 'D, $47,000 .

First, we calculate contribution margin ratio:

Contribution margin ratio = ($770,000 - $154,000) × 100 / $770,000

=80%

Break even point (sales dollars) :

Break even point ( sales dollars) = Fixed costs/ contribution margin ratio

=$37,600/0.80

=$47,000

Answer 2

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