The following information pertains to Apollo Company's cost-volume-profit relationships: $\begin{array}{ll}
\text { Break-even point in units sold } & 1,500 \
\text { Variable costs per urit } & \$ 700 \
\text { Total fixed costs } & \$ 225,000
\end{array}$ How much will be contributed to profit before taxes by the 1,501st unit sold?
A)$850
B)$700
C)$150
D)$0

Question

Quizplus · Accepted Answer

The contribution to profit before taxes by the 1,501st unit sold is the selling price per unit minus the variable cost per unit. At the break-even point, total revenue equals total costs, so the contribution margin per unit is the selling price minus the variable cost. The contribution margin can be calculated as follows: Total fixed costs / Break-even point in units = Contribution margin per unit. Therefore, $225,000 / 1,500 = $150. Thus, the contribution to profit before taxes by the 1,501st unit is $150.

The Following Information Pertains to Apollo Company's Cost-Volume-Profit Relationships How Much Will Be Contributed to Profit Before Taxes by