High School

Vault-Tec has annual fixed costs, excluding depreciation, of $1,000,000, and variable costs that are 75% of sales. If depreciation was $250,000, what was Vault-Tec's break-even level of sales?

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.

To learn more about the break-even level, click here:

https://brainly.com/question/24233845

#SPJ4