Answer:
Break-even point in unit sales = 2,300 units
Break-even point in dollar sales = $29,908.97 (Approx)
New break-even point in unit sales = 2,600 units
New break-even point in dollar sales = $33,810.14 (Approx)
Explanation:
Given:
Selling price = $13 per unit
Variable expense = $11 per unit
Fixed expense = $4,600
Computation:
Break-even point in unit sales = Fixed expense / [Selling price - Variable expense]
Break-even point in unit sales = 4,600 [13-11]
Break-even point in unit sales = 2,300 units
Contribution margin = [(13-11)] / 13 = 15.38%
Break-even point in dollar sales = Fixed expense / Contribution margin
Break-even point in dollar sales = $4,600 / 15.38%
Break-even point in dollar sales = $29,908.97 (Approx)
New break-even point in unit sales = [4,600+600][13-11]
New break-even point in unit sales = 2,600 units
New break-even point in dollar sales = Fixed expense / Contribution margin
New break-even point in dollar sales = $5,200 / 15.38%
New break-even point in dollar sales = $33,810.14 (Approx)
