If Fixed Costs Are $400,000 and the Unit Contribution Margin

question 155

Multiple Choice

If fixed costs are $400,000 and the unit contribution margin is $20, what amount of units must be sold in order to have a zero profit?

• A) 25,000 units
• B) 10,000 units
• C) 400,000 units
• D) 20,000 units

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Definitions:

Total Cost

The sum of all costs incurred by a business in producing a certain level of output, including both fixed and variable costs.

Cost Of Capital

The rate of return that a company must earn on its investment projects to maintain its market value and attract funds.

Cost Of Labor

Refers to the total amount spent by employers on wages, benefits, and payroll taxes for their employees.

Slope

In mathematics, it is the measure of the steepness or inclination of a line, often calculated as the ratio of the vertical change to the horizontal change between two points on the line.