The Fort Lauderdale office has monthly fixed overhead of $132,000 and an average gross margin of 22.0% of sales. What monthly sales volume is needed to break even?
Correct Answer
B) $600,000
Break-even sales equal fixed costs divided by gross margin percentage.
Why This Is the Correct Answer
Break-even sales equal fixed costs divided by gross margin percentage.
Why the Other Options Are Wrong
Option A: $29,040
$29,040 is below the supported result for break-even sales; it likely uses the wrong base, period, or account bucket.
Option C: $169,231
$169,231 is below the supported result for break-even sales; it likely uses the wrong base, period, or account bucket.
Option D: $154,000
$154,000 is below the supported result for break-even sales; it likely uses the wrong base, period, or account bucket.
Memory Technique
Checks Fort money shelf: cost for markup, price for margin.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Section Three, Financial Analysis, Break-even and Gross Profit; use the job ledger figures in the stem and recompute the same accounting measure.
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