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2 years ago

Flying Cloud Co. has the following operating data for its manufacturing operations:

Business

1 answer:

rjkz [21]2 years ago

6 0

Answer:

a) increased by 368 units

Explanation:

The calculation of the next break even point should be

Existing break-even point for Flying Cloud Co. is

= Fixed Cost ÷ Contribution Margin Per Unit

= Fixed Cost ÷ Sales Price Per Unit - Variable Cost per Unit

= $980,000 ÷ ( $350 - $100)

= 3,920 Units

Now

Revised Variable cost = $100 × 110%

= $110

And,

Revised Fixed cost = $980,000 × 105%

= $1,029,000

So,

Revised break-even point for Flying Cloud Co. is

= Fixed Cost ÷ ( Contribution Margin Per Unit

= Fixed Cost ÷ ( Sales Price Per Unit - Variable Cost per Unit

= $1,029,000 ÷ ( ( $350 -$110)

= 4,287.5

= 4,288 units

So,

Increase = 4,288 Units - 3920 Units

= 368 Units Increase

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3 years ago

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