EM Sales had $2,200,000 in sales last month. The contribution margin ratio was 30% and operating...
Question:
EM Sales had $2,200,000 in sales last month. The contribution margin ratio was 30% and operating profits were $180,000.
What is EM's break-even sales volume?
a. $660,000
b. $2,020,000
c. $1,540,000
d. $1,600,000
Break-Even Point:
The break-even point can also be called the zero-profit point, as it represents the sales revenue point where all costs are covered but no profit is generated. Knowing the break-even point is vital for all business owners. Sales beyond the break-even point earn profits for the business whereas a company incurs a loss when its sales volume is below the break-even point.
Answer and Explanation: 1
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| Sales | $2,200,000 |
| Contribution margin ratio | 30% |
| Contribution margin | $660,000 |
| Operating profits | $180,000 |
| Fixed cost | $480,000 ($660,000 - $180,000) |
| Br... |
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How to Calculate the Break-Even Point - Definition & Formula
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Chapter 5 / Lesson 28
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See how to calculate break-even point (in units and dollars). See the variables of the break-even point formula and examples. Understand the purpose of break-even analysis.
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