Bates Company Currently Produces and Sells 4,000 Units of a Product

question 91

Multiple Choice

Bates Company currently produces and sells 4,000 units of a product that has a contribution margin of $5 per unit.The company sells the product for a sales price of $20 per unit.Fixed costs are $20,000.The company has recently invested in new technology and expects the variable cost per unit to fall to $12 per unit.The investment is expected to increase fixed costs by $15,000.After the new investment is made,how many units must be sold to break even?

• A) 2,917 units
• B) 4,375 units
• C) 7,000 units
• D) 4,000 units

---

Definitions:

Agonist

A substance that fully activates the receptor it binds to, producing a full biological response.

Antagonist

In physiology, a muscle that acts in opposition to the action of another muscle, called the agonist; in pharmacology, a substance that inhibits the action of another substance.

Neuromodulator

A neuromodulator is a substance in the nervous system that modifies the functions of neurons, influencing how signals are transmitted across synapses.

Neurotransmitter

Chemical substances that transmit signals from one neuron to another across synapses, playing key roles in the functioning of the nervous system.