Variable costs for Abbey Inc. are 25% of sales. Its selling price is $100 per unit. If Abbey sells one unit more than break-even units how much will profit increase?
A) $75
B) $25
C) $50
D) $400

Question

Quizplus · Accepted Answer

Since variable costs are 25% of sales, the contribution margin per unit is 75% of the selling price, which is $75 ($100 - $25). Selling one unit more than the break-even point increases profit by the contribution margin, which is $75.

Variable Costs for Abbey Inc