After the break-even point is reached, a firm that has a per-unit contribution margin of $20 will have a $500 increase in profits when sales increase by:

Question

Quizplus · Accepted Answer

To find out the number of units needed to increase profits by $500, we can use the following formula:
Contribution Margin per unit x number of units sold = increase in profits
$20 x number of units sold = $500
Number of units sold = $500/$20
Number of units sold = 25
Therefore, an increase in sales by 25 units will result in a $500 increase in profits for the firm after the break-even point is reached.

After the Break-Even Point Is Reached, a Firm That Has