A company has fixed costs of $10,000 and sells its product for $50 each with a variable cost of $30. What is the break-even point in units, and how does the contribution margin affect pricing decisions?

To find the break-even point in units, we first need to understand the contribution margin, which is the selling price minus the variable cost. In this case, the contribution margin is $50 (selling price) minus $30 (variable cost), giving us $20 per unit. The break-even point is when total revenue equals total costs, which means we need to cover the fixed costs of $10,000 using the contribution margin. To find the break-even point, we divide the fixed costs by the contribution margin: $10,000 divided by $20 equals 500 units. This means the company must sell 500 units to cover all costs, and understanding the contribution margin helps the company make pricing decisions, as it shows how much each sale contributes to covering fixed costs and generating profit.