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 break-even point can be calculated as:

Break-even point (units) = Fixed expenses / Contribution margin per unit

= $12,000 / ($100 - $60) per unit

= 300 units

Therefore, the company needs to sell at least 300 units to cover its fixed expenses and break even.

The fixed expenses remain constant regardless of the activity level, which means that choice B is incorrect.

The contribution margin ratio is calculated as:

Contribution margin ratio = Contribution margin / Sales

= ($100 - $60) per unit / $100 per unit

= 40%

Therefore, choice C is correct.

Hence, the answer is C.

Dodero Company Produces a Single Product That Sells for $100