Question

If fixed costs are $270,000, the unit selling price is $70, and the unit variable costs are $45, what are the old and new break-even sales in units (rounded to a whole number) if the unit selling price increases by $6

Answer 1

Answer:

Results are below.

Explanation:

Giving the following information:

Fixed costs= $270,000

Unitary selling price= $70

Unit variable costs= $45

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

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

Break-even point in units= 270,000 / (70 - 45)

Break-even point in units= 10,800

Now, if the selling price is $76:

Break-even point in units= 270,000 / (76 - 45)

Break-even point in units= 8,710