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In this question could not understand from where it got the 0.48 contribution
If the variable cost is 52% of sales then the contribution must be 48% of the sales.
ok understood however in the answer it says that:
Sales rev of $1.5m total contr 45% x 1.5m = $675,000
it leaves a further $625,000 of fixed cost to cover. To achieve breakeven sales in excess of 1.5m need to be $625,000 / 0.48 = $1.302So does this means that the question is asking the breakeven sales in excess ? as I could not understand what its after
The question asks for the total sales revenue in order to breakeven.
Revenue of $1.5 millions will result in a contribution of $675,000.
The need a contribution of $1.3 million to break even so they need an extra $625,000 which means they need extra revenue (on top of the $1.5 million) of $1.302 million.
So the total revenue needed is $2.802 million
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