Brief Exercise 189 Presto Corp had total variable costs of 1

Brief Exercise 18-9 Presto Corp. had total variable costs of $188,480, total fixed costs of $165,400, and total revenues of $304,000. Compute the required sales in dollars to break even. (Round answer to 0 decimal places, e.g. 1,225.) Required sales

Solution

Total Revenues = $304,000
Total Variable Costs = $188,480

Contribution Margin Ratio = (Total Revenues - Total Variable Costs) / Total Revenues
Contribution Margin Ratio = ($304,000 - $188,480) / $304,000
Contribution Margin Ratio = 0.38

Breakeven point in dollar sales = Total Fixed Costs / Contribution Margin Ratio
Breakeven point in dollar sales = $165,400 / 0.38
Breakeven point in dollar sales = $435,263

So, required sales in dollars to break even is $435,263