The following information pertains to Venus Company's cost-volume-profit relationships:
Break-even point in units sold 1,000
Variable costs per unit $ \$ 500 $
Total fixed costs $ \$ 150.000 $
How much will be contributed to profit before taxes by the 1,001st unit sold?
A)$650
B)$500
C)$150
D)$0

Question

The following information pertains to Venus Company's cost-volume-profit relationships:
Break-even point in units sold                        1,000
Variable costs per unit                                    $ \$ 500 $
Total fixed costs                                            $ \$ 150.000 $
How much will be contributed to profit before taxes by the 1,001st unit sold?
A)$650
B)$500
C)$150
D)$0

Quizplus · Accepted Answer

The contribution to profit before taxes by the 1,001st unit sold is the selling price minus the variable cost per unit. At the break-even point, total revenue equals total costs, so the contribution margin per unit is the selling price minus the variable cost. Given the break-even point and fixed costs, the contribution margin per unit is $150, which is the amount contributed to profit by each additional unit sold beyond the break-even point.

The Following Information Pertains to Venus Company's Cost-Volume-Profit Relationships: Break-Even $500 \$ 500 $500

The Following Information Pertains to Venus Company's Cost-Volume-Profit Relationships:
Break-Even $\$ 500$