Answer :
Vault-tec's break-even level of sales is $3,000,000 if the variable costs are 75% of sales.
The break-even point can be described as the level of activity at which a company or organization must operate such that the company's total revenue will equal its total costs. The organization makes no profit or loss at this point.
Break-even point (sales) = Fixed cost ÷ c/s ratio
Here the term c/s means the contribution to sales ratio
c/s = (sales - variable costs) / sales
c/s is the proportion of sales value that is earned as the contribution.
c/s = 100% - 75% = 25%
Break-even point = (1,000,000 - 250,000) ÷ 25%
Break-even point = 750,000 ÷ 0.25
Break-even point = $3,000,000
Therefore, the Vault-tec's break-even level of sales is calculated to be $3,000,000.
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