At a Breakeven Point of 20,000 Units, the Variable Costs

question 83

Multiple Choice

At a breakeven point of 20,000 units, the variable costs were $30,000 and the fixed costs were $80,000. What will the next (i.e., 20,001^st) unit sold contribute to profit before income taxes?

• A) $5.50
• B) $4.00
• C) $1.50
• D) Cannot be determined.

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Definitions:

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, considering the time value of money.

Individual Retirement Account

A tax-advantaged investing tool that individuals use to earmark funds for retirement savings.

Rate of Return

The profit or deficit generated from an investment during a defined timeframe, represented as a percentage of the investment's initial value.

Insurance Settlement

An insurance settlement is the payment made by an insurance company to a claimant, policyholder, or a designated recipient as compensation for a covered loss or policy event.