Fixed costs are $60,000 and the contribution margin ratio is 25 percent. What sales amount is needed to break even?
Correct Answer
B) $240,000.
Break-even sales are fixed costs divided by contribution margin ratio: $60,000 / 0.25 = $240,000.
Why This Is the Correct Answer
Break-even sales are fixed costs divided by contribution margin ratio: $60,000 / 0.25 = $240,000.
Why the Other Options Are Wrong
Option A: $150,000.
$150,000. is below the supported result for break-even analysis; it likely uses the wrong base, period, or account bucket.
Option C: $300,000.
$300,000. is above the supported result for break-even analysis; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $400,000.
$400,000. is above the supported result for break-even analysis; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Break-Even Analysis fence: markup starts at cost, margin looks back from price.
Reference Hint
Study anchor (closed-book): memorize Break-even analysis 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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