A Company Has Fixed Costs of $900 and a Per-Unit

question 21

Multiple Choice

A company has fixed costs of $900 and a per-unit contribution margin of $3.Which of the following statement is (are) true?

• A)Each unit "contributes" $3 toward covering the fixed costs of $900.
• B)The situation described is not possible and there must be an error.
• C)Once the break-even point is reached,the company will increase income at the rate of $3 per unit.
• D)The firm will definitely lose money in this situation.
• E)Statements "A" and "C" are truE.

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Definitions:

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