To find the total fixed costs, we use the formula for the break-even point in units:

$\text{Break-even point (units)} = \frac{\text{Fixed Costs}}{\text{Price per unit} - \text{Variable Cost per unit}}$

Values from the image:

• Break-even point (units): $17,500$
• Product price per unit: $26.50$
• Variable cost per unit: $15.25$

Substitute these values into the formula and solve for Fixed Costs:

$17,500 = \frac{\text{Fixed Costs}}{26.50 - 15.25}$

Step-by-step Calculation:

1. Calculate the contribution margin (price per unit - variable cost per unit): $26.50 - 15.25 = 11.25$

2. Rearrange the equation to solve for Fixed Costs: $\text{Fixed Costs} = 17,500 \times 11.25$

3. Multiply: $\text{Fixed Costs} = 196,875$

Final Answer:

The company's total fixed cost amount is $196,875.

Group of answer choices:

• Correct answer: $196,875

Would you like further details or explanations on this calculation?

Related Questions:

1. How is the contribution margin ratio calculated and interpreted?
2. What happens to the break-even point if fixed costs increase?
3. How can changes in variable costs affect the break-even point?
4. How would the fixed costs be distributed if multiple products are involved?
5. How is the margin of safety calculated and used in decision-making?

Tip:

Always verify your contribution margin calculation when solving break-even analysis problems—it plays a critical role in ensuring the accuracy of your result!