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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