Determine its break-even point in sales dollars.
Assume a local Cost Cutters provides cuts, perms, and hairstyling services. Annual fixed costs are $120,000, and variable costs are 40 percent of sales revenue. Last year's revenues totaled $250,000.
Fixed costs =120,000
Let x be the sales revenue
0.6x is the contribution
For break even sales 0.6x =120,000
x = 120,000/0.6 = $200,000
Since 250,000 > 200,000 it is more than break even sales
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