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March 28, 2017

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Currently, the unit selling price of a product is $110, the unit variable cost is $80, and the total fixed costs are $345,000. A proposal is being evaluated to increase the unit selling price to $120.

a. Compute the current break-even sales (units).
units

b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant.
units

  • Accounting - ,

    a) unit margin =110-80 = 30
    Fixed cost =345000
    Break-even = 345000/30 = 11500 units

    b) new break-even = 345000/40 = 8625 units

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