Cost-Volume- Profit Analysis
Cost-Volume- Profit (CVP) is an excellent tool for analyzing short-term financial decisions. Assume the following current information:
sales price per unit $7.50
total fixed costs $250,000 unit
volume 125,000
1. What does the variable cost per unit need to be in order to break even (operating margin becomes $0) at this volume?
a. $7.50
b. $5.50
c. $2.00
d. $6.50
e. none of the above Answer is
2. Prove It.