To calculate the break-even point in terms of sales dollars, divide the fixed costs by the contribution margin.
Break-even sales dollars = $30,000
How do you calculate break-even point in sales dollars?
- To calculate the break-even point in terms of sales dollars, divide the fixed costs by the contribution margin. ...
- Fixed Costs Contribution Margin = Break-Even Point (sales dollars).
- Contribution Margin = Product Price minus Variable Costs.
- The point at which a company's revenues equal its costs is known as the break-even point. The break-even point can be calculated in two ways: one is to determine the number of units that must be sold, and the other is to determine the amount of sales, in dollars, that must occur.
1 - Variable Cost Ratio = Contribution Margin Ratio
Contribution margin ratio = 1 - 0.70 = 0.30
Break-Even Sales Dollars = Total Fixed Cost / Contribution Margin Ratio
Break-even sales dollars = $9,000 / 0.30 = $30,000
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