Alex Miller, Inc., sells car batteries to service stations for an average of $30 each. The variable cost of each battery is $20 and monthly fixed manufacturing costs total $10,000. Other monthly fixed costs of the company total $8,000

Required:
a. What is the breakeven point in batteries?
b. What is the margin of safety, assuming sales total $60,000?
c. What is the breakeven level in batteries, assuming variable costs increase by 20%?
d. What is the breakeven level in batteries, assuming the selling price goes up by 10%, fixed manufacturing costs decline by 10%, and other fixed costs decline by $100?

Answer:
a. N = Breakeven units
$30N - $20N - $10,000 - $8,000 = 0
$10N - $18,000 = 0
N = $18,000/$10 = 1,800 batteries

b. Margin of safety = $60,000 - ($30 × 1,800) = $6,000

c. N = Breakeven units
$30N - $24N - $10,000 - $8,000 = 0
$6N - $18,000 = 0
N = $18,000/$6 = 3,000 batteries

d. N = Breakeven units
$33N - $20N - $9,000 - $7,900 = 0
$13N - $16,900 = 0 N = $16,900/$13 = 1,300 batteries