Claude industries is planning on purchasing a new piece of equipment that will increase the quality of its production. it hopes the increased quality will generate more sales. the company's contribution margin ratio is 40%, and its current breakeven point is $ 650 comma 000 in sales revenue. if the company's fixed expenses increase by $ 35 comma 000 due to the equipment, what will its new breakeven point be (in sales revenue)? \

The new breakeven point is 737,500 in sales revenue

Explanation:

Breakeven point = Fixed cost / Contribution Margin Ratio

Actual Fixed Cost are Contribution Margin Ratio x Breakeven point

Fixed cost=Contribution Margin Ratio x Breakeven point

Fixed cost=0.40 x 650,000

Fixed cost=260000

If the company's fixed expenses increase

Fixed cost=260000 + 35000

Fixed cost=295000

Breakeven point = 295000/ 0.40

Breakeven point = 737,500

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