Roland had revenues of $614,000 in March. Fixed costs in March were $210, 270 and profit was...
Question:
Roland had revenues of $614,000 in March. Fixed costs in March were $210, 270 and profit was $53,750.
A. What was the contribution margin percentage?
B. What monthly sales volume (in dollars) would be needed to break-even?
C. What sales volume (in dollars) would be needed to earn $173,720?
Break-Even Analysis:
The break-even sales are sales that result in no profits and no losses. The sales revenue equals the variable and fixed costs at this point. The Break-even point also helps determine the target sales to achieve the target profit.
Answer and Explanation: 1
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A) The contribution margin percentage is 43%.
{eq}\text{Contribution margin ratio} = \dfrac{\text{Fixed costs + Profits}}{\text{Sales Revenue}} =...
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Break-Even Analysis: Definition & Example
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Chapter 4 / Lesson 3
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A break-even analysis utilizes a price calculation formula to determine how much product a business must sell and at what price in order to make a profit. Learn how to apply this analysis through examples with fixed and variable costs, and discover the importance of a margin of safety.
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