Product a Sells for $100 Per Unit and Has a Contribution

question 35

Multiple Choice

Product A sells for $100 per unit and has a contribution margin rate of 25%. Fixed expenses total $80 000 annually. How many units of Product A must be sold to yield a profit of $40 000?

• A) 1 600
• B) 4 800
• C) 10 000
• D) 25 000

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Definitions:

Mortgage

A legal agreement whereby a lender lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt.

Monthly Payments

Regular payments made over a specified period of time, often used in the context of loan repayments or rental agreements.

Times Interest Earned

A financial metric indicating how well a company can cover its debt payments, by comparing its earnings before interest and taxes against its interest expenses.

Income Before Taxes

A company’s total earnings or profit before income tax expense has been deducted.