Question

Steadigen Company sells two generators long dash Model A and Model Blong dashfor $ 432 per unit and $ 410 per unit, respectively. The variable cost of Model A is $ 404 per unit and of Model B is $ 304 per unit. If Steadigen Company's sales incentives reward sales of the goods with the highest contribution margin per unit, the sales force will be motivated to push sales of Model A more aggressively than Model B.What is the breakeven in units for Model A and Model B.

Answer 1

Answer:

False

Explanation:

Contribution margin per unit = Sales -  variable cost

Contribution margin per unit (Model A) = $432 - $404

Contribution margin per unit (Model A) = $28 per unit

Contribution margin per unit (Model B) = $410 - $304

Contribution margin per unit (Model B) = $106 per unit

False, Contribution margin per unit (Model B) is higher so,  motivated to push sales of Model A will be false.

Break-even in units = Fixed cost / Contribution margin per unit

Break-even in units (Model A) =  Fixed cost / $28

Break-even in units (Model B) =  Fixed cost / $106