Question

Crane Company sells radios for $50 per unit. The fixed costs are $465000 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 $165000 and variable costs will be 50% of the selling price. The new break-even point in units is:

Answer 1

Answer:

25,200

Explanation:

Breakeven quantity are the number of  units produced and sold at which net income is zero

Breakeven quantity = fixed cost / price – variable cost per unit

Fixed cost = $465000 + $165000 = $630,000

Price = $50

variable cost = 0.5 x 50 = $25

Breakeven = $630,000 / $25 = 25,200