Asked by
Julio Miranda
on Nov 12, 2024
Verified
If fixed costs are $500,000 and the unit contribution margin is $20, what is the break-even point in units if fixed costs are reduced by $80,000?
A) 25,000
B) 29,000
C) 4,000
D) 21,000
Contribution Margin
The difference between sales revenue and variable costs, used to cover fixed costs and to provide profit to the company.
Fixed Costs
Expenses that do not change with the volume of production or sales, such as rent, salaries, and insurance.
- Gauge the break-even parameters in unit and dollar measures within different cost and price environments.
- Appraise the impact of changes in unchanging expenses, changing expenses, and the sales value on the computation of break-even points.
Verified Answer
CM
Learning Objectives
- Gauge the break-even parameters in unit and dollar measures within different cost and price environments.
- Appraise the impact of changes in unchanging expenses, changing expenses, and the sales value on the computation of break-even points.