If Fixed Costs Are $850,000 and Variable Costs Are 70

question 75

Multiple Choice

If fixed costs are $850,000 and variable costs are 70% of sales,what is the break-even point (in dollars) ?

• A)$1,214,286
• B)$1,983,333
• C)$2,833,333
• D)$2,550,000

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Definitions:

Net Present Value

The difference between the present value of an investment project’s cash inflows and the present value of its cash outflows.

Discount Rate

The discount rate employed in the evaluation of discounted cash flow (DCF) to ascertain the current worth of prospective cash flows.

Overhaul Costs

Expenses associated with performing major maintenance or repairs to extend the life of an asset.

Salvage Value

The anticipated remaining worth of an asset when it reaches the end of its operational lifespan.