Summersville Production Company had the following projected information for the current year: $$\begin{array} { l l r }
\text { Selling price per unit } & \$ 150 \
\text { Variable cost per unit } & \$ 90 \
\text { Total fixed costs } & \$ 300,000
\end{array}$$
What is the profit when one unit more than the break-even point is sold?
A)$60
B)$150
C)$1,500,150
D)$600,060

Question

Summersville Production Company had the following projected information for the current year: $$\begin{array} { l l r } 
\text { Selling price per unit } & \$  150 \
\text { Variable cost per unit } & \$  90 \
\text { Total fixed costs } & \$ 300,000
\end{array}$$
What is the profit when one unit more than the break-even point is sold?
A)$60
B)$150
C)$1,500,150
D)$600,060

Quizplus · Accepted Answer

The break-even point in units is calculated by dividing the total fixed costs by the contribution margin per unit (selling price per unit - variable cost per unit). Here, the contribution margin per unit is $150 - $90 = $60. The break-even point in units is $300,000 / $60 = 5,000 units. Selling one unit more than the break-even point (5,001 units) would result in a profit of $60 for that additional unit, since the fixed costs are already covered by the sales of the first 5,000 units.

Summersville Production Company Had the Following Projected Information for the Current