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Question - Light Up is a company that manufactures a light fixture. They have been in business for 10 years. In the month of August, the company sold 400 light fixtures. The sales price for the light fixture was $24. During the month, fixed costs were $4,320 and variable costs were 40% of sales.
Required -
a. Determine the contribution margin in dollars, per unit, and as a ratio.
b. Calculate the break-even point in units and dollars.
c. How much are total variable costs at break-even?
d. Explain what happens to fixed costs when sales exceed breakeven.
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