A contractor's fixed overhead is $90,000 per year and the average gross profit margin on jobs is 30%. How much sales revenue is needed to break even on overhead?
a.$90,000
b.$117,000
c.$300,000
d.$270,000
Explanation
Break-even sales = fixed overhead divided by gross margin: $90,000 / 0.30 = $300,000. At $300,000 in sales, the 30% margin produces exactly $90,000 to cover overhead.
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