If fixed costs are $500,000 and the unit contribution margin is $20, what is the break-even point in units if fixed costs are reduced by $80,000?
A) 25,000
B) 29,000
C) 4,000
D) 21,000

Question

Quizplus · Accepted Answer

The break-even point in units is calculated by dividing the fixed costs by the unit contribution margin. If fixed costs are reduced by $80,000, the new fixed costs are $500,000 - $80,000 = $420,000. Therefore, the break-even point is $420,000 / $20 = 21,000 units.

If Fixed Costs Are $500,000 and the Unit Contribution Margin