Company X is selling 400,000 units for $1.50 each.

The contribution margin ratio is 20%.

If Company X will break even at this level of sales, what is their fixed costs?

The Total Contribution Margin (TCM) is Total Revenue (TR, or Sales) minus Total Variable Cost (TVC):

TCM = TR − TVC

20% equals $600,000 - x or variable cost.

VC equals $600,000 - 20%
VC equals $120,000
FC equals $480,000

What I got was different...

Using the formula

Total revenues at breakeven = fixed expenses / contribution margin

600,000 = x / 0.2

600,000 * 0.2 = X

the answer I got was 120,000

?? :eek: :confused: :eek:??