A Company Has Fixed Costs of $900 and a Per-Unit

Multiple Choice

A company has fixed costs of $900 and a per-unit contribution margin of $3. Which of the following statements is true?

A) Each unit "contributes" $3 toward covering the fixed costs of $900.
B) The situation described is not possible and there must be an error.
C) Once the break-even point is reached; the company will increase income at the rate of $3 per unit.
D) The firm will definitely lose money in this situation.
E) Each unit "contributes" $3 toward covering the fixed costs of $900 and once the break-even point is reached, the company will increase income at the rate of $3 per unit.