Question

Marigold Corp. sells radios for $50 per unit. The fixed costs are $545000 and the variable costs are 60% of the selling price. As a result of new automated equipment, it is anticipated that fixed costs will increase by $35000 and variable costs will be 50% of the selling price. The new break-even point in units is:

Answer 1

The new break-even point in units is: $23,200

Solution:

Given,

Marigold Corp. sells radios for $50 per unit

Fixed costs = $545000

Variable costs = 60%

As a consequence of the modern electronic facilities, the fixed costs are projected to rise by $35,000 and the variable costs would be 50% of the purchase price.

Now,

The new break-even point in units is:

= $545000 + $35000

= $580,000

=> 580,000/25 = $23,200