Sales level at which operating income is zero: If sales above breakeven, then profit; if sales below break even, then loss; fixed expenses = total contribution margin.
Total sales = total expenses
Break Even Point:  Unit Sold = Fixed expenses + Operating Income / Contribution Margin per unit
Break Even Point:  Sales $ = Fixed expenses + Operating Income / Contribution Margin Ratio
Problem
1. Calculate the break even number of units if the fixed expenses are $7,000 and the contribution margin is $14/unit.
2. Calculate the break even sales dollars if the fixed expenses are $7,000 and the contribution ratio is 40%.
3. Calculate the break even number of units with a target profit of $120,000 if the fixed expenses are $15,000 and the contribution margin is $60/unit.

Answer rating: 100% (QA)

Lets calculate the breakeven point for each scenario Scenario 1 1 Calculate the breakeven number of ... View the full answer