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Information relates to the break-even point at Pezzo Corporation

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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?
A) $132,000
B) $136,000
C) $168,000
D) $176,000

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Solution Summary

The expert examines information related to the break-even point at Pezzo Corporation.

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Dear student,

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 ...

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