Question

Brooklyn sells a single product to wholesalers. The company's budget for the upcoming year revealed anticipated unit sales of 33,200, a selling price of $26, variable cost per unit of $11, and total fixed costs of $364,000. If Brooklyn's unit sales are 300 units less than anticipated, its breakeven point will:
A. increase by $15 per unit sold.
B. decrease by $15 per unit sold.
C. increase by $11 per unit sold.
D. decrease by $11 per unit sold.
E. not change.

Answer 1

Answer:

E. not change.

Explanation:

The break even point is a point at which the company produces a quantity at which it does not earn any profit or face any losses, so it is a point where the revenues are equal to cost. The break even quantity depends on the fixed cost, variable cost and price of the product and not on the quantity sold. So when the Brooklyn Unit sales are 300 units less than expected it wont change the break even point because the break even point has no relation to it.