Gerber Company is planning to sell 200,000 units for $2.00 a unit and will just break even at this level of sales.The contribution margin ratio is 25%.What are the company's fixed expenses?

Question

Quizplus · Accepted Answer

The contribution margin is $0.50 per unit ($2.00 sales price - $1.50 variable cost per unit). The contribution margin ratio is 25%, so the fixed expenses are $100,000 ($0.50 contribution margin per unit / 0.25 contribution margin ratio).

Gerber Company Is Planning to Sell 200,000 Units for $2