A Company Has Total Fixed Costs of $240000 and a Contribution

question 130

Multiple Choice

A company has total fixed costs of $240000 and a contribution margin ratio of 20%. The total sales necessary to break even are

• A) $960000.
• B) $1200000.
• C) $300000.
• D) $288000.

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Definitions:

FIFO

An inventory valuation method that assumes the first items placed in inventory are the first sold, hence "First In, First Out."

Ending Inventory

The value or quantity of goods and materials available at the end of an accounting period.

Perpetual Inventory System

An inventory management method where transactions are recorded in real time, providing a continuous account of inventory levels.

LIFO

"Last In, First Out" is an inventory valuation method where the last items placed in inventory are the first ones to be used or sold.