Question

Richland Enterprises has budgeted the following amounts for its next fiscal​ year: Total fixed expenses $ 48 comma 000 Selling price per unit $ 45 Variable expenses per unit $ 30 If Richland Enterprises can reduce fixed expenses by $ 4 comma 140​, how will breakeven sales in units be​ affected?

Answer 1

Answer:

The number of units needed to break even will decrease by 276 units

Explanation:

Giving the following information:

Total fixed expenses $48,000

Selling price per unit $45

Variable expenses per unit $30

Richland Enterprises can reduce fixed expenses by $4,140.

First, we need to calculate the actual break-even point in units:

Break-even point= fixed costs/ contribution margin

Break-even point= 48,000/ (45 - 30)= 3,200 units

New fixed costs= 48,000 - 4,140= 43,860

Now, we calculate the new break-even point:

Break-even point= 43,860 / 15= 2,924

The number of units needed to break even will decrease by 276 units.