Question

The following information pertains to Nova Co.'s cost-volume-profit relationships:

Breakeven point in units sold ………………………….. 2,000
Variable expenses per unit ……………………………… 500
Total fixed expenses …………………………………… $150,000
How much will be contributed to net operating income by the 2,001st unit sold?
A. $ 65
B. $ 75
C. $150
D. $ 0

Answer 1

Answer: $150

Step-by-step explanation:

Breakeven point in units sold = 2,000

Variable expenses per unit = 500

Total fixed expenses = $150,000

The break even in units is calculated as:

= Fixed Cost / Contribution per Unit

Therefore,

1000 = 150000/ Contribution per unit

Contribution per Unit will now be:

= 150000 / 1000

= 150

It should be noted that after the break even point, every unit sold will lead to an increase in the contribution per unit to the net operating income. Therefore, the amount that'll be contributed to net operating income by the 2,001st unit sold is $150.