Future Business Leaders of America (FBLA) Marketing Practice Test

What is the breakeven point in dollar sales if a bookstore has costs of $400 for a display and sells books at $12 with costs of $10 per book?

1. $200

2. $400

3. $300

4. $250

The correct answer is: $200

To find the breakeven point in dollar sales, it’s essential to first understand the breakeven point concept, which is the point at which total revenues equal total costs, resulting in neither profit nor loss. In this scenario, the bookstore incurs fixed costs, which are the upfront costs for the display, amounting to $400. Additionally, each book sold contributes to variable costs of $10 and generates revenue of $12. This means the contribution margin per book, which is calculated by subtracting variable costs from the selling price, is $2 ($12 - $10). To determine the breakeven point in units sold, you divide the total fixed costs by the contribution margin per unit. This can be calculated as follows: Breakeven in units = Fixed Costs / Contribution Margin = $400 / $2 = 200 units. Next, to find the breakeven point in dollar sales, you multiply the number of units by the selling price per unit: Breakeven in dollar sales = Units Sold * Selling Price = 200 units * $12 = $2400. However, the question specifically asks for the breakeven point in dollar sales without incorporating the book unit example above. Understanding the question context in terms