A Product Has a Contribution Margin of $2

question 23

Multiple Choice

A product has a contribution margin of $2.50 per unit and a selling price of $25 per unit.Fixed costs are $20,000.Assuming new technology increases the unit contribution margin by 50 percent but increases total fixed costs by $13,750,what is the new break-even point in units?

• A) 3,667 units
• B) 3,333 units
• C) 13,500 units
• D) 9,000 units

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Definitions:

Trend

A general direction in which something is developing or changing, often used in the context of markets or fashion.

Qualitative Forecasting

A method of prediction that relies on non-quantifiable information such as expert opinion or market trends rather than numerical data.

Associative Model

A data model that is designed to link data in a way that is more flexible and intuitive than traditional relational databases, focusing on the associations among data points.

Time-Series Model

A statistical technique that analyzes sequences of data points, typically measured at successive times, to forecast future values based on past trends.