Smith Ltd Has a Contribution Margin Ratio of 40% and a a Breakeven

question 23

Multiple Choice

Smith Ltd. has a contribution margin ratio of 40% and a breakeven point of $200,000 in sales. If the firm reports net profit of $50,000 after taxes of 50%, what were total sales for the year?

• A) $450,000
• B) $466,667
• C) $500,000
• D) $700,000

---

Definitions:

Good 1

A term used in economic models to represent the first of multiple goods considered in analysis, often with unspecified characteristics.

Price Elasticity

The degree to which the demand for an item is affected by fluctuations in its cost.

Demand Function

A mathematical representation of how the quantity demanded of a good is influenced by its price and other factors.

Price Elasticity

A metric assessing the reaction of the amount of a good demanded to its price alterations.