6 Corny and Sweet grows and sells sweet corn at its roadside

6. Corny and Sweet grows and sells sweet corn at its roadside produce stand. The selling price per dozen is $ 5.00, variable costs are $ 1.75 per dozen, and total fixed costs are $ 325. What are breakeven sales in dollars? A. $ 500 B. $ 175 C. $ 100 D. $ 675

Solution

Solution:

Selling price = $5

Variable costs= $1.75

Contribution margin ratio = contribution margin / sale

= ($5 - $1.75) / $5 = 65%

Break even sale in dollars = fixed costs / contribution margin ratio

= $325 / 65% = $500

Hence option \"A\" is correct.