Question

CheckOut Tech Inc. sells cash registers for $1,200 each. If the firm's total fixed costs are $273,000 and its variable costs are $420 per unit, then which of the following statements is accurate?

a. CheckOut Tech's unit contribution margin is 35% and its break-even point in units is 565.
b. CheckOut Tech's unit contribution margin is 25% and its break-even point in units is 790.
c. CheckOut Tech's unit contribution margin is 74% and its break-even point in units is 267.
d. CheckOut Tech's unit contribution margin is 65% and its break-even point in units is 350.

Answer 1

The correct statement for CheckOut Tech Inc. is that the unit contribution margin is 65%, and the break-even point in units is 350.

Step-by-step explanation:

To determine CheckOut Tech Inc.'s unit contribution margin and break-even point in units, we need to calculate these values based on the information provided.

The unit contribution margin is calculated as:

Selling Price per Unit - Variable Cost per Unit

For CheckOut Tech Inc., this is:

$1,200 - $420 = $780

The contribution margin as a percentage of the selling price is then:

($780 / $1,200) * 100% = 65%

The break-even point in units is calculated as:

Total Fixed Costs / Unit Contribution Margin

For CheckOut Tech Inc., this is:

$273,000 / $780 = 350 units

Therefore, the correct statement is:

d. CheckOut Tech's unit contribution margin is 65% and its break-even point in units is 350.