SBD Phone Company sells its waterproof phone case for $90 per unit. Fixed costs total $162,000, and variable costs are $36 per u

Question

4 years ago

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SBD Phone Company sells its waterproof phone case for $90 per unit. Fixed costs total $162,000, and variable costs are $36 per u

nit. How will the break-even point in units change in response to each of the following independent changes in selling price per unit, variable cost per unit, or total fixed costs

Business

1 answer:

Stells [14] · Answer 1 · 2021-12-15T06:27:14+03:00

Answer:

Instructions are below.

Explanation:

<u>To calculate the break-even point in units, we need to use the following formula:</u>

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 162,000 / (90 - 36)

Break-even point in units= 3,000

<u>The break-even point in units is the number of units required to cover for the fixed costs.</u> At this point, the net income is zero. When cost increase, there are necessary more units to break even.

Fixed cost increase= break-even point in units increases

Unitary variable cost increase= contribution margin decreases. Break-even point in units increases

Selling price increase= break-even point in units decreases.