Determining Break-Even Point: Example Problem
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Sentry Corporation's income statement for last year appears below:
Sales.................................................. $1,500,000.00
Cost of Sales:
Direct Materials.................$250,000.00
Direct Labor (variable)..........$150,000.00
Variable Overhead..............$75,000.00
Fixed Overhead..................$100,000.00 $575,000.00
Gross Margin.............................. $925,000.00
Selling, General, and Administrative:
Variable...........................$200,000.00
Fixed...............................$250,000.00 $450,000.00
Net Operating Income................... $475,000.00
The break-even point last year was:
A) $146,341.00
B) $636,364.00
C) $729,730.00
D) $181,818.00
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Solution Summary
The solution computes the break-even point through an income statement.
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