Deen Enterprises currently sells its products for $1,200 per unit. Management is contemplating a 10% increase in the selling price for the next year. Variable costs are currently 40% of sales revenue and are not expected to change next year
Fixed expenses are $147,000 per year.
What is the breakeven point in units at the anticipated selling price per unit next year?
A) 175 units
B) 82 units
C) 245 units
D) 408 units
A
Explanation: A)
Sales price $1,200
× increase × 1.10%
New Sales Price $1,320
Sales Price $1,200 × 40%
Variable % = $480 Variable costs
Sales Price $1,320
Less Variable costs 480
Contribution Margin $840
Fixed exp $147,000 / $840 CM = 175 BE units
You might also like to view...
Dividend reinvestment plans offer which advantage(s)?
1. deferment of federal income taxes 2. a convenient means to accumulate shares 3. dollar cost averaging a. 1 and 2 b. 1 and 3 c. 2 and 3 d. only 2
One of the tenets of collectivism is that the welfare of society is best served by letting people pursue their own economic self-interest
Indicate whether the statement is true or false.