Posted: September 22nd, 2016

Assume the following data for the next three (3) questions:

Assume the following data for the next three (3) questions:

Company A Fixed Costs = 0,000
Company A Variable Costs per unit = $0.50
Company A price per unit = $3.00

Company B Fixed Costs = $50,000
Company B depreciation = 10 percent
Company B Contribution Margin = $1.50

20. The break-even point for Company A is:
a) 20,000 units
b) 28,571.43 units
c) 33,333.33 units
d) 40,000 units

21. The break-even point for Company B is:
a) 20,000 units
b) 30,000 units
c) 33,333.33 units
d) 40,000 units

22. As compared to Company A, Company B utilizes low operating leverage. This will work against them when sales are low, but will work in their favor when sales are high.
a) true
b) false