Millar Company produces a single product that 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 can be calculated as follows:

$89 (selling price) - $57 (variable cost) = $32

Therefore, the contribution margin per unit of product is $32. None of the other choices are correct. Fixed costs are not expressed on a per unit basis (A). To break even, the company would need to sell enough units to cover both its fixed and variable costs, not just its fixed costs (B). An increase in sales volume above $68,400 a month would not cause an increase in fixed costs because fixed costs are fixed and do not change with changes in production or sales (C).

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