Last year Easton Corporation reported sales of $480,000, a contribution margin ratio of 25% and a net loss of $16,000. Based on this information, the break-even point was:

A. $435,000

B. $544,000

C. $506,000

D. $600,000

B. $544,000

Explanation:

Given: Sales: $480000.

           Contribution margin ratio= 25%

           net loss= $16000.

Break even point: It is point in business where profit is equal to expenses of the business.

Now, finding the fixed expense.

Fixed expense=

⇒ Fixed expense=

⇒ Fixed expense=

∴ Fixed expense=  

Next, computing the break even point

Sales to Break even point=

⇒ Break even point=

∴ Break even point=

Hence, the break even point was $544000

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