A contractor has fixed overhead of $54,000 and expects a 27 percent gross margin. What sales volume is needed to cover overhead?
Correct Answer
B) $200,000.
Sales needed equals fixed overhead divided by gross margin: $54,000 / 0.27 = $200,000.
Why This Is the Correct Answer
Sales needed equals fixed overhead divided by gross margin: $54,000 / 0.27 = $200,000.
Why the Other Options Are Wrong
Option A: $145,800.
$145,800. is below the supported result for break-even sales calculation; it likely uses the wrong base, period, or account bucket.
Option C: $216,000.
$216,000. is above the supported result for break-even sales calculation; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $254,000.
$254,000. is above the supported result for break-even sales calculation; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Break-Even Sales fence: markup starts at cost, margin looks back from price.
Reference Hint
Study anchor (closed-book): memorize Break-even sales calculation from CSLB Law and Business Study Guide; CSLB 2026 Law Book / CSLB Law and Business Study Guide Business Finances; know the rule or calculation trigger without relying on exam-room lookup.
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