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.

Instructions

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.