A Company Has Total Fixed Costs of $200,000 and a Contribution

question 148

Multiple Choice

A company has total fixed costs of $200,000 and a contribution margin ratio of 20%.The total sales necessary to break even are

• A)$800,000.
• B)$1,000,000.
• C)$250,000.
• D)$240,000.

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Definitions:

Budget Performance Report

A report comparing actual results with budget figures.

Cost Center

A division or department within a business that does not directly contribute to profit but incurs costs, used for budgeting and controlling expenses.

Level of Management

Refers to the hierarchy within an organization's structure, typically including top-level, middle-level, and lower-level management.

Direct Expense

Costs that can be directly traced to a product, service, or specific cost center, such as raw materials and labor.