A Company Has Fixed Costs of $60,000 Per Month

question 96

Multiple Choice

A company has fixed costs of $60,000 per month. If sales double from 6,000 to 12,000 units during the month, fixed costs in total will

• A)double.
• B)remain the same.
• C)be cut in half.
• D)be none of the above.

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Definitions:

Contribution Margin

The difference between sales revenue and variable costs, indicating how much contributes to covering fixed costs and generating profit.

Normal Sales

The expected amount of sales based on historical data, market conditions, and economic forecasts, under regular business operations.

Per Unit

A term indicating the cost, price, or required quantity of something on an individual basis.

Outside Supplier

An external entity that provides goods or services to another company.