Answer:
A. $60 per unit
B. 0.20 or 20%
C. 8,400 units
D.$2,520,000
Step-by-step explanation:
Contribution Margin is the net of selling price and variable cost of the product.
Contribution margin = $300 - $240 = $60
Contribution margin ratio is the ratio of contribution to selling price of the product.
Contribution margin ratio = $60 / $300 = 0.2 = 20%
The break-even point is the level of sales at which the business incur no profit no loss.Fixed and variable costs are covered at this level of sales.
Formula for Break- even
Break-even (units) = Fixed cost / Contribution margin per unit
Placing value in the formula
Break-even (units) = $504,000 / $60 = 8,400 units
Break-even ( $ ) = Fixed cost / Contribution margin ratio
Placing value in the formula
Break-even ( $ ) = $504,000 / 20% = $2,520,000