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Fixed costs of 13,500 dollars and a contribution margin of 60 dollars per unit give a break-even volume of:
A810 units
B225 units
C125 units
D325 units
Answer & Solution
Correct answer: B. 225 units
1. Break-even is reached when contribution margin covers fixed costs.
2. Contribution margin per unit is what remains after variable costs.
3. That remainder goes toward covering fixed costs.
4. Dividing 13,500 dollars by 60 dollars per unit gives the volume needed.
5. That is 225 units, matching the Hicks Manufacturing break-even figure.
_Source: OpenStax Principles of Accounting, Volume 2: Managerial Accounting (CC BY-NC-SA 4.0), Ch 3 'Cost-Volume-Profit Analysis'_
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