Currently, Fixed Costs Are $500,000 and the Unit Contribution Margin

question 32

Multiple Choice

Currently, fixed costs are $500,000 and the unit contribution margin is $40.What would be the break-even point in units if fixed costs are reduced by $80,000?

• A) 14,500 units
• B) 20,000 units
• C) 10,500 units
• D) 12,500 units

---

Definitions:

Working Capital

The disparity between a firm's immediate assets and liabilities, showcasing its short-term financial health and operational effectiveness.

Warehouse

A facility for storing goods that are being prepared for distribution or sale.

Profitability Index

A financial tool that calculates the ratio of the present value of future cash flows to the initial investment cost, determining the attractiveness of an investment.

Payback Period

The duration it takes for an investment to recoup its initial costs through profits or savings.