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Adams Company sells a product whose contribution margin is $10 and selling price is $25.

If the company's break-even point is 100 units, its total fixed costs must be $500.

a) True

b) False

Respuesta :

Answer:

answer is b) False

Explanation:

given data

contribution margin = $10

selling price = $25

total fixed costs = $500

break-even point  = 100 units

solution

we get here Break even point that is

Break even point = [tex]\frac{fix\ cost}{contribution\ margin}[/tex]   ...........1

Break even point = [tex]\frac{500}{10}[/tex]

Break even point = 50 units

but we have given break-even point is 100 units

so answer is b) False

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