Question

Beasley Company currently sells its products for​ $30 per unit. Management is contemplating a​ 10% increase in the selling price for the next year. Variable costs are currently​ 40% of sales revenue and are not expected to change in dollar amount on a per unit basis next year​ (the company will pay the same amount for variable costs next​ year). Fixed expenses are​ $68,250 per year. What is the breakeven point in units at the anticipated selling price per unit next​ year?

Answer 1

Answer:

Explanation:

Selling price per unit (next year) = 30 + 10 % of 30 = $33

Variable cost per unit (next year) = 30 * 40 % = $12

Contribution per unit (next year) = Selling price per unit (next year) - Variable cost per unit (next year) = 33 - 12  = $21

Fixed expenses = $68,250

Break even point (in units) = Fixed expenses / Contribution per unit.

Break even point (in units) = 68,250 / 21 = $3,250