Millar Company produces a single product which it sells for $89 a unit.If the fixed costs of manufacturing and selling the product are $68,400 a month and the variable costs are $57 a unit,which of the below is correct?

Question

Quizplus · Accepted Answer

The contribution margin per unit is calculated by subtracting the variable cost per unit from the selling price per unit. In this case, $89 - $57 = $32. Therefore, the correct option is D. Option A is incorrect because fixed costs are not calculated on a per unit basis. Option B is incorrect because the break-even point is determined by dividing fixed costs by the contribution margin per unit, which in this case is $68,400 ÷ $32 = 2,138 units, not dollars. Option C is incorrect because fixed costs do not increase as sales volume increases.

Millar Company Produces a Single Product Which It Sells for $89