Break-Even Sales Currently, the unit selling price of a product is $220, the unit variable cost is $180, and the total fixed costs are $288,000. A proposal is being evaluated to increase the unit selling price to $240. a. Compute the current break-even sales (units). units b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant. units

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Break-Even Sales
Currently, the unit selling price of a product is $220, the
unit variable cost is $180, and the total fixed costs are
$288,000. A proposal is being evaluated to increase the
unit selling price to $240.
a. Compute the current break-even sales (units).
units
b. Compute the anticipated break-even sales (units),
assuming that the unit selling price is increased and all
costs remain constant.
units
Transcribed Image Text:Break-Even Sales Currently, the unit selling price of a product is $220, the unit variable cost is $180, and the total fixed costs are $288,000. A proposal is being evaluated to increase the unit selling price to $240. a. Compute the current break-even sales (units). units b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant. units
Expert Solution
Step 1

a):- Contribution per Unit = Selling price per unit - Variable cost per Unit =$220 - $180 = $40

 

Break Even sales (Units) = Fixed Cost / Contribution Per Unit =$288000/$40 =7200 units

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