Pascal, Inc.is planning to sell 800,000 units for $1.50 per unit.The contribution margin ratio is 20%.If Pascal will break even at this level of sales, what are the fixed costs?
A)$240,000.
B)$560,000.
C)$800,000.
D)$960,000.

Question

Quizplus · Accepted Answer

The contribution margin per unit is $1.50 * 20% = $0.30. At break-even, total contribution margin equals fixed costs. Therefore, 800,000 units * $0.30 = $240,000 in fixed costs.