- 7. Assume the following information: Selling price per unit Contribution margin ratio Total fixed costs $200 50% $275,000 How many units must be sold to generate a profit of $50,000? a. 2,500 units b. 4,000 units c. 2,750 units d. 3.250 units 8. The break-even point is when a. total sales equal variable costs. b. total revenue equals total cost. c. total sales equal operating income. d. the company is operating at a loss. 9. Elite Company had originally expected to earn operating income of $140,000 in the coming year. Elite's degree of operating leverage is 2.6. Recently, Elite revised its plans and now expects to increase sales by 25% next year. What is the percent change in operating income expected by Elite in the coming year? a. 54% b. 65% c. 20% d. 8% 10. Rocha & Noel Company makes and sells dolls. The price is $20 and the variable expense per unit is $14. What is the contribution margin ratio? (Note: Round answer to two decimal places.) a. 62.55% b. 55.67% c. 30.00% d. 37.45%