Sales have to increase by $50,000 for dexter to break even.
The contribution margin ratio is ($60,000 - $15,000)/$150,000 = 30%.
Break-even sales are $60,000/0.30 = $200,000.
Sales must increase by $200,000 - $150,000 = $50,000.
A business's contribution margin – additionally called the gross margin – is the money left over from sales after paying all variable expenses related to generating a product. Subtracting constant charges, along with rent, system rentals, and salaries from your contribution margin yield your net profits or profit.
Gross margin is the amount of income left after subtracting the fee of goods sold from revenue, at the same time as contribution margin is the amount of profit left after subtracting variable costs from revenue.
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