Question

Dodero Company produces a single product which sells for $100 per unit. Fixed expenses total $12,000 per month, and variable expenses are $60 per unit. The company's sales average 500 units per month. Which of the following statements is correct? Select one: a. The company's break-even point is $12,000 per month. b. The fixed expenses remain constant at $24 per unit for any activity level within the relevant range. c. The company's contribution margin ratio is 40%. d. Responses A, B, and C are all correct.

Answer 1

Response B and C are correct. Response A is not correct as the break-even point is 3000 units or $30,000 in revenue

Step-by-step explanation:

Break-even point = Total fixed cost /selling price - variable cost

= 12,000/(100-60) units= 300 units

Fixed cost per unit = Total fixed cost/Number of unit= $12000/500 units = $24

Contribution margin ratio = (Selling price -variable cost)/selling price × 100

= (100- 60)/100× 100 = 40%

Response B and C are correct. Response A is not correct as the break-even point is 3000 units or $30,000 in revenue