Dodero Company produces a single product which sells for $100 per unit. Fixed ex

Question

Dodero Company produces a single product which sells for $100 per unit. Fixed expenses total $12,000 per month, and variable expenses are $60 per unit. The company's sales average 500 units per month. Which of the following statements is correct?

a.The company's break-even point is $12,000 per month.
b. The fixed expenses remain constant at $24 per unit for any activity level within the relevant range.
c. The company's contribution margin ratio is 40%.
d. Responses A, B, and C are all correct.
please show work

Explanation / Answer

Selling Price $100 per unit variable expenses $60 per unit Contribution $40 per unit Contribution ratio = (Contribution per unit / selling price per unit) x 100 = (40/ 100) x 100 = 40% c. The company's contribution margin ratio is 40%.

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