Madison Company has provided the following information
Sales price per unit $40
Variable cost per unit 18
Fixed costs per month $12,800
What is the amount of sales in dollars required for Madison to break even? (Round any percentages to two decimal places and your final answer to the nearest dollar.)
A) $711
B) $23,273
C) $582
D) $12,800
B .B) Required sales in dollars = (Fixed costs + Target profit) / Contribution margin ratio
Contribution margin ratio = Contribution margin / Net sales revenue
Sales price $40
Less: variable cost (18 )
Contribution margin $22
Contribution margin ratio = ($22 / $40 ) x 100 = 55.00%
Required sales in dollars = ($12,800 + 0 ) / 55.00% = $23,273
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