A Royal Palm Beach startup expects monthly fixed overhead of $78,000 and average gross margin of 18.0% of sales. What monthly sales volume is needed to break even?
Correct Answer
D) $433,333
Break-even sales equal fixed overhead divided by gross margin percentage.
Why This Is the Correct Answer
Break-even sales equal fixed overhead divided by gross margin percentage.
Why the Other Options Are Wrong
Option A: $14,040 banking setup log
$14,040 banking setup log is below the supported result for startup break-even; it likely uses the wrong base, period, or account bucket.
Option B: $95,122 tax registration packet
$95,122 tax registration packet is below the supported result for startup break-even; it likely uses the wrong base, period, or account bucket.
Option C: $96,000 ownership review memo
$96,000 ownership review memo is below the supported result for startup break-even; it likely uses the wrong base, period, or account bucket.
Memory Technique
Prepares Royal money shelf: cost for markup, price for margin.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Builder's Guide to Accounting, Break-even and gross profit planning; verify the startup duty, registration, or financial setup before answering.
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