Asked by Heather Marie on Jun 17, 2024
Verified
If fixed costs are $46,800, the unit selling price is $42, and the unit variable costs are $24, the break-even sales (units) if the variable costs are decreased by $2 is
A) 2,127 units
B) 1,114 units
C) 2,340 units
D) 1,950 units
Break-even Sales
The amount of revenue required to cover total costs, both fixed and variable, with no profit or loss.
Unit Selling Price
The price at which a single unit of a product is offered for sale to customers.
Unit Variable Costs
The cost associated with producing one additional unit of product, including materials, labor, and other variable expenses.
- Calculate break-even points in units and dollars under various scenarios, including changes in fixed costs, variable costs, and selling prices.
Verified Answer
BF
Brandon Family Christian GardenJun 18, 2024
Final Answer :
C
Explanation :
The break-even point in units can be calculated using the formula: Break-even point = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). If the variable costs decrease by $2, the new variable cost per unit is $22 ($24 - $2). Therefore, the break-even point = $46,800 / ($42 - $22) = $46,800 / $20 = 2,340 units.
Learning Objectives
- Calculate break-even points in units and dollars under various scenarios, including changes in fixed costs, variable costs, and selling prices.