Assume that sales are predicted to be $26250 the expeccted contribution margin is $1o,500, and a net loss of S1.750 is anticipated. The break-even point in sales (S) iSelect one:Oa. 21,875Ob.28,00DOc30,625d.14583Oe 20417

Answered: Ssume that sales are predicted to be…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assume that sales are predicted to be $26250 the expeccted contribution margin is $1o,500, and a net loss of S1.750 is anticipated. The break-even point in sales (S) i
Select one:
Oa. 21,875
Ob.28,00D
Oc30,625
d.14583
Oe 20417

Expert Solution

Step 1

The correct option is c. $30,625

Calculation:

$N e t L o s s = C o n t r i b u t i o n m a r g i n - F i x e d \cos t ($ 1, 750) = $ 10, 500 - F i x e d A s s e t F i x e d A s s e t = $ 10, 500 + $ 1, 750 F i x e d A s s e t = $ 12, 250$

$C o n t r i b u t i o n m a r g i n r a t i o = \frac{C o n t r i b u t i o n M a r g i n}{S a l e s} C o n t r i b u t i o n m a r g i n r a t i o = \frac{$ 10, 500}{$ 26, 250} C o n t r i b u t i o n m a r g i n r a t i o = 40 %$

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