Question

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

Answer 1

answer is b) False

Step-by-step 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 =
`(fix\ cost)/(contribution\ margin)` ...........1

Break even point =
`(500)/(10)`

Break even point = 50 units

but we have given break-even point is 100 units

so answer is b) False