If a Business Had Sales of $4,000,000,fixed Costs of $1,200,000,a

question 105

Multiple Choice

If a business had sales of $4,000,000,fixed costs of $1,200,000,a margin of safety of 25%,and a contribution margin ratio of 40%,what was the break-even point?

• A)$3,000,000
• B)$2,800,000
• C)$4,800,000
• D)$2,000,000

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Definitions:

Quick Ratio

A measure of a company's short-term liquidity, calculated as (Current Assets - Inventory) / Current Liabilities, indicating how well a company can meet its short-term financial liabilities.

Days' Sales in Inventory

A financial metric that estimates how long it takes for a company to turn its inventory into sales.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including materials and labor costs.

Inventory

The entire stock of materials and products that a company possesses for the aim of production or selling.