Answer (C) is correct . The contribution margin per unit is $4 ($30 selling price – $26 unit variable cost). Fixed costs of $180,000 divided by the contribution of $4 per unit gives breakeven sales volume of 45,000 units.
Answer (A) is incorrect because This number of units will cover the fixed costs for the year but not the variable costs ($180,000 ¡Â $30 = 6,000).
Answer (B) is incorrect because Dividing the total fixed costs by the variable cost per unit rather than the contribution margin per unit results in 6,924 units.
Answer (D) is incorrect because The total fixed costs should be divided (not multiplied) by the unit contribution margin. |
