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Dalian Company provides the following information: Price per unit: $20 Variable cost per unit: $8 Fixed costs per month: $15,000 What is the breakeven point in sales dollars? $22,750 $25,000 $18,500 $37,500

Respuesta :

Answer:

$25,000

Explanation:

Break even point in dollars = [tex]\frac{Fixed cost}{Contribution Margin}[/tex]

Here contribution margin = Sales - Variable cost = $20- $8 = $12

Contribution margin ratio = $12/$20 = 60%

Break even point in dollars = $15,000/60% = $25,000

Else it can be calculated by using contribution per unit as follows:

BEP = $15,000/$12 = 1,250 units

Value of 1,250 units  $20 X 1250 = $25,000

Break Even Point in Sales Dollar = $25,000

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