Question

Griggs Company produces a single product with a current selling price of $170. Variable costs are $130 per unit, and fixed costs per month average $6,240. Management is considering increasing the selling price to a proposed $190 per unit. Assume that the variable cost per unit of the product and monthly fixed expenses will not change as a result of the proposed increase in selling price.

Hint: Treat each situation (current and proposed price) as separate potential scenarios when evaluating each question.

At the proposed increased selling price of $190 per unit, closest to what dollar volume of sales per month is required to break-even? (Round your intermediate percentage to one decimal place.)

Multiple Choice

• $19,747

• $18,480

• $10,400

• $9,123

Answer 1

Correct answer--------------$19,747

Working

Sales price per unit	$        190.00
Variable cost per unit	$        130.00
Contribution margin per unit	$          60.00
Contribution margin ratio	31.6%
Fixed cost	$    6,240.00
Break Even point in Dollar (6240/31.6%)	19,747