Dodero Company produces a single product that sells for $100 per unit. Fixed expenses total $12,000 per month, and variable expenses are $60 per unit. The company's sales average 500 units per month. Which of the following statements is correct?

Question

Quizplus · Accepted Answer

The contribution margin per unit is calculated as the selling price per unit minus the variable cost per unit, which is $100 - $60 = $40. The contribution margin ratio is the contribution margin per unit divided by the selling price per unit, which is $40 / $100 = 40%. Choices B and D are incorrect: the break-even point is not $12,000 per month but rather the amount in sales dollars or units needed to cover total costs, and fixed expenses per unit vary with the level of production and are not constant at $24 per unit.

Dodero Company Produces a Single Product That Sells for $100