If fixed costs are $400,000 and the unit contribution margin is $20, what amount of units must be sold in order to have a zero profit?
A) 25,000 units
B) 10,000 units
C) 400,000 units
D) 20,000 units

Question

Quizplus · Accepted Answer

To break even, the total contribution margin must equal the fixed costs. Therefore, the break-even point in units can be calculated by dividing the fixed costs by the unit contribution margin: $400,000 ÷ $20 = 20,000 units. So, in order to have zero profit, 20,000 units must be sold.

If Fixed Costs Are $400,000 and the Unit Contribution Margin