A Company That Makes Environmental Measuring Devices Has Calculated Their

question 11

Multiple Choice

A company that makes environmental measuring devices has calculated their revenue and costs as follows for the most recent fiscal period: Sales $750 000
Costs:
Fixed Costs $200 000
Variable Costs 250 000
Total Costs 450 000
Net Income $300 000
What is the break-even point in sales dollars?

• A) $100 000
• B) $200 000
• C) $300 000
• D) $250 000
• E) $450 000

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Definitions:

Monthly Fixed Cost

Expenses that do not change regardless of the level of production or sales, such as rent or salaries, calculated on a monthly basis.

Operating Leverage

A measure of how sensitive a company's operating income is to a change in sales, indicating the impact of fixed costs on profits.

Contribution Margin

The amount by which sales revenue exceeds variable costs, used to cover fixed costs and generate profit.

Break-Even Point

The point at which total costs equal total revenue, meaning the business does not make a profit or loss.