If fixed costs are $850,000 and the unit contribution margin is $90, what amount of units must be sold in order to have a zero profit?

Question

Quizplus · Accepted Answer

To achieve zero profit, the total revenue must equal the total costs. The total revenue is equal to the unit contribution margin multiplied by the number of units sold. The total costs are equal to the fixed costs plus the variable costs. The variable costs are equal to the unit variable cost multiplied by the number of units sold. Since the unit variable cost is not given, we can assume it is zero. Therefore, the total costs are equal to the fixed costs. Setting the total revenue equal to the total costs, we get:Unit contribution margin * Number of units sold = Fixed costs$90 * Number of units sold = $850,000Number of units sold = $850,000 / $90Number of units sold = 9,444 unitsTherefore, the correct answer is A) 9,444 units.

If Fixed Costs Are $850,000 and the Unit Contribution Margin