if fixed costs are \$400,000 and the unit contribution margin is \$20, the amount of units that must be sold in order to have a zero profit is

a. 400,000 units
b. 20,000 units
c. 10,000 units
d. 25,000 units

Question

if fixed costs are \$400,000 and the unit contribution margin is \$20, the amount of units that must be sold in order to have a zero profit is

a. 400,000 units
b. 20,000 units
c. 10,000 units
d. 25,000 units

Accepted Answer

{ "quality": "clear", "question_count": 1, "skills_matched": [ "step_cot", "multiple_choice_formatter", "explain_then_answer", "tutor", "mastery_adaptive_brevity" ], "needs_drawing": false, "concepts_used": [ "Fixed Cost", "Unit Contribution Margin", "Break-Even Analysis" ], "new_concepts": [], "current_concepts": [ "Fixed Cost", "Unit Contribution Margin", "Break-Even Analysis" ] } ## Identify given values Using the *Fixed Cost* and *Unit Contribution Margin* knowledge points $$ \begin{aligned} &\text{Fixed Costs} = \$400,000 \ &\text{Unit Contribution Margin} = \$20 \end{aligned} $$ ## Calculate break-even units Using the *Break-Even Analysis* knowledge point $$ \begin{aligned} \text{Break-Even Units} &= \frac{\text{Fixed Costs}}{\text{Unit Contribution Margin}} \ &= \frac{\$400,000}{\$20} \ &= 20,000\text{ units} \end{aligned} $$

a. 400,000 units

b. 20,000 units

c. 10,000 units

d. 25,000 units

{ "subject": "Business", "question_type": "Multiple Choice", "knowledge_point": [ "Business", "Accounting", "Break-Even Analysis" ] }

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Question

Explanation:

Identify given values

Calculate break-even units

Answer: