If Fixed Costs Are $80,000, the Contribution Margin Is $25

question 3

Multiple Choice

If fixed costs are $80,000, the contribution margin is $25 per unit, and the targeted profit is $30,000, then the required unit sales are

• A) 4,400 units.
• B) 2,000 units.
• C) 4,500 units.
• D) 2,500 units.

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Definitions:

Wage

The compensation paid to an employee for their labor, usually expressed as an hourly, daily, or weekly rate.

Profit

The financial gain obtained when the amount earned from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Marginal Product

The additional output that results from using one more unit of a particular input while keeping other inputs constant.

Output

The quantity of products or services generated by a business, sector, or economic system over a certain timeframe.