Answer:
option 1 and 4 are incorrect.
Explanation:
Company A
1)If Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, its break-even point in units is 36,000 units.
Break Even in units= Fixed Costs/ Contribution Margin Per unit
Break Even in units=720000/ 30= 24000 which is incorrect.
2)If Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, its variable expenses must be $20 per unit.
Contribution Margin = Selling Price- Variable Expenses= 50- 30= $20
True.
3)If Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, once it has covered its fixed costs, net income will increase by $30 for each additional unit sold.
True
Once the break even sales point is reached the next contribution margin would be profit if the fixed costs remain constant.
4)a)Both if Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, its break-even point in units is 36,000 units Incorrect Break Even in units=720000/ 30= 24000
4)b)and if Company A has fixed costs of $720,000, a selling price of $50 per unit, and contribution margin of $30 per unit, its variable expenses must be $20 per unit are incorrect. (Wrong)
This was correct.
