The following information relates to the break-even point at Pezzo Corporation:
Sales dollars ...................... $120,000
Total fixed expenses .......... $30,000
If Pezzo wants to generate net operating income of $12,000, what will its sales dollars have to be?
Solution is provided in a separate excel file attached in the following parts.Answer (c) $168000 is correct which is proved with working formulas and supporting explanatory notes on conceptual aspects of break even analysis.
Verification of Break even sales:
Break even sales $120,000
Less: Variable cost $90,000
Contribution margin $30,000
Fixed cost $30,000
Net Income (Zero ) Nil
Contribution margin ratio = 30000/120000 25%
Break even sales in Dollars ...
The expert examines information related to the break-even point at Pezzo Corporation.