Which of the following statements regarding Company A is incorrect? Multiple Cho

Question

Which of the following statements regarding Company A is incorrect? Multiple Choice 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 If Company A has fixed costs of $720,ooo, a selling price of $50 per unit, and contribution margin of $30 per unit, its variable expenses must be $20 per unit 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. Both it Company A has fthxed costs of $720.000, a seliling price of $50 per unt, and contribution margin of $30 per unit, its break-even point in units is 36000 units 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

Explanation / Answer

The incorrect option is d.

Contribution margin=Sales-Variable cost

=(50-30)=$20

Hence breakeven=fixed costs/Contribution margin

=(720,000/20)=36000 unit

Also if Contribution margin=$30

Hence variable cost would be =(50-30)=$20 is correct.

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