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Break-Even Sales Currently, the unit selling price of a product is $240, the unit variable cost...

Break-Even Sales

Currently, the unit selling price of a product is $240, the unit variable cost is $200, and the total fixed costs are $364,000. A proposal is being evaluated to increase the unit selling price to $270.

a. Compute the current break-even sales (units).
units

b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased to the proposed $270, and all costs remain constant.
units

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Answer #1

a. Current Break even sales = Fixed Cost / Contribution Margin Per Unit

= Fixed Cost / ( Selling Price - Variable Cost)

= $ 364,000 / ( $ 240- $ 200)

= 9,100 Units

Hence, the correct answer is 9,100 Units

b. Anticipated Break even sales =

Fixed Cost / Contribution Margin Per Unit

= Fixed Cost / ( Selling Price - Variable Cost)

= $ 364,000 / ( $ 270- $ 200)

= 5,200 Units

Hence, the correct answer is 5,200 Units

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