Break-Even Point Calculation for Vaughn Company Step by step Solution with Explanation

Your question:

Vaughn Company has sales of $497000, variable costs of $447300, and fixed costs of $29000. Ivanhoe Company has sales of $497000, variable costs of $199000, and fixed costs of $253000. Vaughn's break-even point in dollars is

$290000.

Break-Even Point Calculation for Vaughn Company Answers and Explanation

We can find Vaughn's break-even point using the contribution margin ratio and formula.

1. Contribution Margin Ratio (CM Ratio):

2. Break-Even Point Formula:

The break-even point is the sales level where total revenue equals total costs (fixed costs + variable costs). We can express it using the CM Ratio:

Explanation of Incorrect Answers:

• $418300 and $476300: These values are likely incorrect calculations based on the provided data.