A company manufactures and sells a product for $120 per unit. The company's fixed costs are $68,760, and its variable costs are $90 per unit. The company's break-even point in dollars is:
A) $91,680.
B) $68,760.
C) $2,292.
D) $275,040.
E) $206,280.

Question

Quizplus · Accepted Answer

The break-even point in dollars is calculated by dividing the fixed costs by the contribution margin ratio. The contribution margin per unit is the selling price per unit minus the variable cost per unit, which is $120 - $90 = $30. The contribution margin ratio is the contribution margin per unit divided by the selling price per unit, which is $30 / $120 = 0.25. Therefore, the break-even point in dollars is the fixed costs divided by the contribution margin ratio, which is $68,760 / 0.25 = $275,040.

A Company Manufactures and Sells a Product for $120 Per