f the breakeven point is 20,000 and the contribution margin is $1.30, how much are fixed costs?Multiple choice question.20,000$15,384$26,000
Question
f the breakeven point is 20,000 and the contribution margin is 15,384$26,000
Solution
The breakeven point is the point at which total revenue equals total costs, meaning the business is not making a profit or a loss.
The formula to calculate the breakeven point in units is:
Breakeven Point in Units = Fixed Costs / Contribution Margin per Unit
Given that the breakeven point is 20,000 units and the contribution margin per unit is $1.30, we can rearrange the formula to find the fixed costs:
Fixed Costs = Breakeven Point in Units * Contribution Margin per Unit
Substituting the given values:
Fixed Costs = 20,000 * 26,000
Therefore, the fixed costs are $26,000.
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