If fixed costs are $46,800, the unit selling price is $42, and the unit variable costs are $24, what is the break-even sale units if the variable costs are decreased by $2?
A)2,127
B)1,114
C)2,340
D)1,950

Question

Quizplus · Accepted Answer

The break-even point in units is calculated by dividing the fixed costs by the contribution margin per unit (selling price - variable cost). With the variable cost decreased by $2, the new variable cost is $22. The contribution margin per unit is $42 - $22 = $20. The break-even point is $46,800 / $20 = 2,340 units.

If Fixed Costs Are $46,800, the Unit Selling Price Is