Assume That Sales Are Predicted to Be $3,750, the Expected

question 86

Multiple Choice

Assume that sales are predicted to be $3,750, the expected contribution margin is $1,500, and a net loss of $250 is anticipated. The break-even point in sales dollars is:

• A) $1,750.
• B) $2,500.
• C) $4,000.
• D) $4,250.
• E) $4,375.

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Definitions:

Product Costs

The total costs directly involved in manufacturing a product, including material, labor, and overhead expenses.

Period Costs

Expenses that are not directly tied to the production process and are typically accounted for as expenses in the period they are incurred.

Contribution Margin

The amount by which sales revenue exceeds variable costs, contributing to the coverage of fixed costs and profit generation.

Direct Manufacturing Cost

The total cost directly involved in the manufacturing of a product, including direct materials and direct labor but excluding overhead.