If fixed costs are $561,000 and the unit contribution margin is $8.00, what is the break-even point in units if variable costs are decreased by $0.50 a unit? a.66,000 b.74,800 c.60,000 d.70,125
If fixed costs are $561,000 and the unit contribution margin is $8.00, what is the break-even point in units if variable costs are decreased by $0.50 a unit? a.66,000 b.74,800 c.60,000 d.70,125
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
If fixed costs are $561,000 and the unit contribution margin is $8.00, what is the break-even point in units if variable costs are decreased by $0.50 a unit?
a.66,000
b.74,800
c.60,000
d.70,125
Expert Solution
Step 1
Meaning of Break Even Point:-
The break-even point can be defined as a point where total costs (expenses) and total sales (revenue) are equal. Break-even point can be described as a point where there is no net profit or loss.
Formula :-
Break Even Point(Units) = Total Fixed Cost / Contribution Margin per Unit
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