| The company has a variable cost ratio of 65% and monthly fixed costs of $91,000. What is the company's break-even point in terms of sales dollars?
FC / CM Percentage
THE CM percentage in this case would be 35%. If you have 100% at sales, less 65% for VC, that leaves the remaining 35% as the contribution margin (CM)
91,000 / 0.35 = 260,000
We can also verify the numbers as well if we want:
If Sales are 260,000
VC should be 65% of that, so 169,000
That would leave us with a CM of 91,000 (which makes up the remaining 35% of Sales), Plus, if we take off the 91,000 in Fixed Costs, we have a 0 Net Income. | 
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