If fixed costs are $50000 and the contribution margin percentage is 20%, the breakeven revenue is _____________?
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Answer: C. $250,000
Explanation
Breakeven revenue is calculated by dividing fixed costs by the contribution margin percentage. Dividing fifty thousand by zero point two zero results in two hundred fifty thousand dollars. The contribution margin percentage indicates how much of each revenue dollar contributes to covering fixed costs. Dividing fixed costs by this percentage determines the total revenue needed to break even.
Management teams use breakeven revenue targets to assess sales performance and evaluate financial feasibility during budget planning. It helps determine if a business model can sustain its fixed operating overhead. Other options stem from incorrect arithmetic, such as multiplying the two figures or using an incorrect percentage conversion. Values like one hundred thousand underestimate the required revenue threshold.
- Subject
- Accounting and Finance
- Category
- Accounting
- Topic
- —
- Difficulty
- medium
Related questions
Q1. If fixed costs are $30000 and the unit contribution margin is $600, the breakeven point in units is ____________?
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Answer: A. 50 units
The breakeven point in units is calculated by dividing total fixed costs by the unit contribution margin. Dividing thirty thousand by six hundred yields exactly fifty units. The breakeven point represents the volume of s...
Q2. If fixed costs are $30000 and the contribution margin percentage is 40%, the breakeven revenue is ____________?
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Answer: B. $75,000
Breakeven revenue is calculated by dividing total fixed costs by contribution margin percentage. Dividing thirty thousand dollars by zero point forty yields seventy-five thousand dollars revenue. This calculation identif...
Q3. If the flexible budget is $21500 and the fixed overhead flexible budget variance is $10000, the actual cost incurred is _________?
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Answer: B. $31,500
Actual cost incurred is derived by adjusting the flexible budget using variance relationships. Combining the flexible budget and fixed overhead variance accounts for actual expenditures. Adding twenty-one thousand five h...
Q4. If the flexible budget amount is $7500 and the sales volume variance is $6500, the static budget amount is ____________?
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Answer: C. $1,000
The static budget amount is determined by subtracting the sales volume variance from the flexible budget amount. Seven thousand five hundred minus six thousand five hundred leaves one thousand. Static budgets are prepare...
Q5. If the flexible budget amount is $62000 and the actual outcome is $35000, the flexible budget amount is ___________?
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Answer: A. $27,000
The variance represents the mathematical difference between the flexible budget and actual outcome. Subtracting thirty-five thousand from sixty-two thousand yields twenty-seven thousand dollars variance. This calculation...
Q6. If the flexible budget amount is $26000 and the fixed overhead flexible budget variance is $12500, the actual cost incurred is ____________?
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Answer: A. $38,500
Actual cost incurred is the sum of the flexible budget amount and favorable variance. Adding twenty-six thousand dollars and twelve thousand five hundred gives thirty-eight thousand five hundred. This calculation account...