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
Business