If fixed costs are $350,000, the unit selling price is $29, and the unit variable costs are $20, what is the break-even sales (units) if the variable costs are decreased by $4?

Answer

26,924 units

12,069 units

21,875 units

38,889 units

12,069

26,924

To calculate the break-even sales (units), we need to use the following formula:

Break-even sales (units) = Fixed costs / (Unit selling price - Unit variable costs)

Given that the fixed costs are $350,000, the original unit selling price is $29, and the original unit variable costs are $20, we can substitute these values into the formula to calculate the original break-even sales:

Break-even sales (units) = $350,000 / ($29 - $20)
Break-even sales (units) = $350,000 / $9
Break-even sales (units) = 38,889 units

Now, to find the break-even sales if the variable costs are decreased by $4, we need to calculate the new unit variable costs. The original unit variable costs are $20, and if we decrease them by $4, the new unit variable costs are $20 - $4 = $16.

Substituting the new unit variable costs into the formula, we can calculate the break-even sales:

Break-even sales (units) = $350,000 / ($29 - $16)
Break-even sales (units) = $350,000 / $13
Break-even sales (units) ≈ 26,923.076

Therefore, the break-even sales (units) if the variable costs are decreased by $4 is approximately 26,924 units.