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erma4kov [3.2K]
4 years ago
14

arnam Company currently produces and sells 26,000 units of a product that has a contribution margin of $9 per unit. The company

sells the product for a sales price of $24 per unit. Fixed costs are $48,600. The company has recently invested in new technology and expects the variable cost per unit to fall to $14 per unit. The investment is expected to increase fixed costs by $18,900. After the new investment is made, how many units must be sold to break-even? (Do not round intermediate calculations.)
Business
1 answer:
Elena-2011 [213]4 years ago
7 0

Answer:

BEP units 6,750

It needs to sale 6,750 to break-even

Explanation:

First, we calculate the new contribution margin:

Sales \: Revenue - Variable \: Cost = Contribution \: Margin

sales price              24

new variable cost    14

contribution margin 10

Then we proceed with the BEP in units

\frac{Fixed\:Cost}{Contribution \:Margin} = Break\: Even\: Point_{units}

fixed cost 48,600 + 18,900 = <u>67,500</u>

contribution margin 10

\frac{67,500}{10} = Break\: Even\: Point_{units}

BEP units 6,750

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The answer and procedures of the exercise are attached in the following archives.

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You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

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Based on the question above, <u>demand and supply</u> will increase.

<h3>Demand</h3>
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