Question

Sabv Corporation's break-even-point in sales is $870,000, and its variable expenses are 75% of sales. If the company lost $37,000 last year, sales must have amounted to:

Multiple Choice

• $833,000

• $796,000

• $722,000

• $615,500

Answer 1

Correct Answer is $ 722,000

explanation (in $)

calculation of fixed cost

Variable cost is 75% of sale, So Fixed cost = 25% of sales

fixed cost = 25% of 870000

fixed cost = $ 217,500

Calculation of sales if loss is $ 37,000

sales - variable cost - fixed cost = (Loss )

Note Loss will be in negative

sales - variable cost - 217,500 = - 37000

sales - varibale cost = 217,500-37000

sales - varibale cost = 180,500

let sale be = x

Note variable cost is 75% of sale

sale - 75% of sale = 180500

x - 0.75 x= 180500

0.25 x = 180500

x = 180500/0.25

x= 722,000

So sale is 722,000

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