Question

Concord Corporation sells radios for $50 per unit. The fixed costs are $665000 and the variable costs are 60% of the selling price. As a result of new automated equipment, it is anticipated that fixed costs will increase by $195000 and variable costs will be 50% of the selling price. The new break-even point in units is:

Answer 1

Answer:

Break-even point= 34,400 units

Explanation:

Giving the following information:

Concord Corporation sells radios for $50 per unit.

The fixed costs= $665000

The variable costs= are 60% of the selling price.

New costs:

Increase in fixed costs= 195,000

Variable costs will be 50% of the selling price.

First, we need to determine the new total fixed costs and unitary variable cost:

Fixed cost= 665,000 + 195,000= $860,000

Unitary variable cost= $25

Now, we can calculate the new break-even point in units:

Break-even point= fixed costs/ contribution margin

Break-even point= 860,000 / (50 - 25)

Break-even point= 34,400 units