If fixed costs are $40000 and the unit contribution margin is $800, the breakeven point in units is ___________?
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Answer: C. 50 units
Explanation
Breakeven units equal total fixed costs divided by the unit contribution margin. Dividing forty thousand dollars by eight hundred dollars yields exactly fifty units. This calculation identifies the sales volume required to cover all fixed expenses. Breakeven point represents the sales volume where total revenues equal total costs. Unit contribution margin is selling price minus variable cost per unit of product. Fixed costs do not change with production volume within the relevant operating range.
Business planners calculate breakeven units to evaluate sales targets for new products. Management uses unit breakeven analysis to assess the risk of launching operations. Sales teams rely on these volume metrics to establish individual and departmental quotas. Option A overstates the required units by applying an incorrect division formula. Option B underestimates the unit sales needed to achieve breakeven equilibrium. Option D suggests a higher unit volume not supported by the cost and margin data.
- Subject
- Accounting and Finance
- Category
- Accounting
- Topic
- —
- Difficulty
- medium
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