I\'m having trouble answering these four questions Use the following to answer q

Question

I'm having trouble answering these four questions

Use the following to answer questions –8- 11:

Selling price per unit $ 100
Variable expenses per unit $ 40
Fixed expenses per month $60,000



8. Operating income at a volume of 4,000 units per month is:
A) $240,000
B) $200,000
C) $180,000
D) $120,000

The break-even point volume of units is:
A) 0
B) 360
C) 720
D) 1000


10. The break-even point in terms of total revenues per month is:
A) $30,000
B) $60,000
C) $75,000
D) $100,000

The contribution margin ratio is:
A) 40%
B) 60%
C) 62.5%
D) 70%

Explanation / Answer

8. $100*4000 - $40*4000 - $60000 = 180000 You are creating $100 value foreach inventory unit. You lose $40 to create each unit. And you always lose $60000. 9. Do the same thing. 100x - 40x - 60000 = 0 (0 means you broke-even on sales, no loss) 60x = 60000 x = 1000 10. 1000 * $100 = $100000 That is your revenue, which doesn't take into consideration costs 11. Contribution = Price - Cost = 100 - 40 = 60 Ratio = Contirbution/ Price = 60/100 = 60%

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