Answer the Following Questions Using the Information Below

question 98

Multiple Choice

Answer the following questions using the information below:
Martha Manufacturing produces a single product that sells for $80. Variable costs per unit equal $32. The company expects total fixed costs to be $72,000 for the next month at the projected sales level of 2,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately.
-What is the current breakeven point in terms of number of units?

• A)1,500 units
• B)2,250 units
• C)3,333 units
• D)None of these answers are correct.

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Definitions:

Contribution Margin

The amount remaining from sales revenue after variable expenses are subtracted, contributing towards covering fixed costs and profit.

Variable Selling Expenses

Costs that fluctuate with the level of sales, such as commissions or shipping fees.

Variable Administrative Expenses

Expenses that vary with the level of business activity, such as sales commissions or supply costs.

Fixed Selling Expenses

Costs associated with selling that do not change with sales volume, including salaries of sales staff and advertising expenses.