At the breakeven point of 2,000 units,variable costs total $4,000 and fixed costs total $6,000.The 2,001st unit sold will contribute ________ to profits.
A) $1
B) $2
C) $3
D) $5

Question

Quizplus · Accepted Answer

The contribution margin per unit can be calculated as follows:
Contribution margin per unit = Price per unit - Variable cost per unit
Since we know that at the breakeven point, 2,000 units are sold and variable costs total $4,000, we can calculate the variable cost per unit as follows:
Variable cost per unit = Total variable costs / Number of units
Variable cost per unit = $4,000 / 2,000 units = $2 per unit
We also know that at the breakeven point, fixed costs total $6,000. Therefore, the total cost at the breakeven point is:
Total cost = Total fixed costs + Total variable costs
Total cost = $6,000 + $4,000 = $10,000
Since the breakeven point is 2,000 units, the price per unit can be calculated as follows:
Price per unit = Total revenue / Number of units
Price per unit = Total cost / Number of units
Price per unit = $10,000 / 2,000 units = $5 per unit
Using this information, we can calculate the contribution margin per unit as follows:
Contribution margin per unit = Price per unit - Variable cost per unit
Contribution margin per unit = $5 - $2 = $3 per unit
Therefore, for the 2,001st unit sold, the contribution to profits would be $3.

At the Breakeven Point of 2,000 Units,variable Costs Total $4,000