Answer:
Instructions are below.
Explanation:
Giving the following information:
Selling price= $14
Units sold= 80,00
Total variable cost= $800,000
Total fixed costs= $560,000
New selling price= $11
First, we need to calculate the unitary variable cost:
Unitary variable cost= 800,000/80,000= $10
Now, we can calculate the actual break-even point in units using the following formula:
Break-even point in units= fixed costs/ contribution margin per unit
Break-even point in units= 560,000 / (14 - 10)
Break-even point in units= 140,000 units
Finally, we determine the new break-even point in units using the selling price of $11.
Break-even point in units= 560,000 / (11 - 10)
Break-even point in units= 560,000 units