Explore BrainMass

Explore BrainMass

    Finding the Break-even Point in Sales Dollars

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Wallace, Inc., prepared the following budgeted data based on a sales forecast of $6,000,000:

    Variable Fixed
    Direct materials $1,600,000
    Direct labor 1,400,000
    Factory overhead 600,000 $ 900,000
    Selling expenses 240,000 360,000
    Administrative expenses 60,000 140,000
    Total $3,900,000 $1,400,000

    What would be the amount of sales dollars at the break-even point?
    A) $2,250,000
    B) $3,500,000
    C) $4,000,000
    D) $5,300,000

    © BrainMass Inc. brainmass.com March 6, 2023, 2:29 pm ad1c9bdddf

    Solution Preview

    The formula to find the break-even point in sales dollars is:

    Break-even point in sales dollars=Fixed Costs/Contribution Margin Ratio
    Contribution Margin Ratio=Contribution Margin/Sales Revenues
    Contribution Margin Ratio=(Sales Revenues-Variable Costs)/Sales ...

    Solution Summary

    This solution discusses cost-volume-profit relationships in great depth and illustrates how to find the break-even point in sales dollars.