Business FinancesQuestion 41 of 1605
A contractor has fixed monthly overhead of $10,000 and a variable cost ratio of 70% of revenue. What monthly revenue is needed to break even?
a.$10,000
b.$14,286
c.$33,333
d.$70,000
Explanation
Break-even = Fixed Costs ÷ (1 − Variable Cost Ratio) = $10,000 ÷ (1 − 0.70) = $10,000 ÷ 0.30 = $33,333. At this revenue, total costs equal total revenue.
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