Product a Sells for $20 Per Unit and Has a Contribution

question 36

Multiple Choice

Product A sells for $20 per unit and has a contribution margin rate of 40%. Fixed expenses total $120 000 annually. How many units of Product A must be sold to yield a profit of $30 000?

• A) 12 500
• B) 18 750
• C) 75 000
• D) 50 000

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Definitions:

Book Value

The net value of a company's assets, subtracting liabilities and generally expressed on a per-share basis.

Book Value

The net value of an asset reported on the balance sheet, calculated as the asset's cost minus accumulated depreciation.

Plant Asset

Long-term tangible assets used in the production of goods and services, such as machinery, buildings, and equipment.

Accumulated Depreciation

The total amount of an asset's cost that has been expensed since the asset was acquired and put into use.