Cartman Enterprises management has budgeted the following amounts for its next fiscal year:

Total fixed expenses $550,000
Selling price per unit $25
Variable expenses per unit $15

If Cartman Enterprises can reduce fixed expenses by $16,000, how will breakeven sales in units be affected?
A) Increase by 400 units
B) Increase by 1,600 units
C) Decrease by 400 units
D) Decrease by 1,600 units

D
Explanation: D)
Sales $25.00
Less Variable expenses 15.00
Contribution Margin $10.00

Fixed Expense $550,000 / $10 CM = 55,000

Fixed expense $550,000
Less Reduction 16,000
Equals 534,000 / $10 CM = 53,400 Break Even; 1,600 Decrease

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