Answer:
Current Break Even point = 6,500 units
Break Even point in Unit Sale = 7,500 units
Explanation:
The computation of break-even sales is shown below:-
Sale price = $8,000
Variable expense = $4,400
Contribution margin = Sale price - Variable expenses
= $8,000 - $4,400
= $3,600
Fixed expenses = $23,400,000
Current Break Even point = Fixed expenses ÷ Contribution margin
= $23,400,000 ÷ $3,600
= 6,500 units
Therefore for computing the break even point we simply divide contribution margin by fixed expenses
b. Sale price = $7,520
Variable expense = $4,400
Contribution margin =$7,520 - $4,400
= $3,120
Fixed expenses plus desired profit = $23,400,000
Break Even point in Unit Sale = Fixed expenses ÷ Contribution margin
= $23,400,000 ÷ $3,120
= 7,500 units
So, for computing the break even point we simply divide contribution margin by fixed expenses
