Breakeven Point Calculation for Zirconia Fantasy Necklace Sales

What is the breakeven point in total sales dollars for Zirconia Fantasy?

A. $50,000

B. $110,000

C. $66,667

D. $92,308

Answer:

The breakeven point in total sales dollars for Zirconia Fantasy is $66,667.

To find the breakeven point in total sales dollars for Zirconia Fantasy, we first calculate the contribution margin per unit. The contribution margin is the difference between sales revenue and variable costs. In this case, the contribution margin is $180,000 ($240,000 - $60,000).

Next, we calculate the percentage of contribution margin by dividing the contribution margin by the sales revenue. The percentage of contribution margin is 75% ($180,000 / $240,000).

Then, we divide the fixed costs by the percentage of contribution margin to find the breakeven point in total sales. The breakeven point is $66,667 ($50,000 / 0.75).

Therefore, based on the data provided, the correct answer is C. $66,667 as the breakeven point in total sales dollars for Zirconia Fantasy.