Question

If fixed costs are $240,000, the unit selling price is $32, and the unit variable costs are $20, what are the old and new break-even sales (units) if the unit selling price increases by $4?
a. 12,000 units and 15,000 units
b. 7,500 units and 6,667 units
c. 20,000 units and 30,000 units
d. 20,000 units and 15,000 units

Answer 1

Margin units = 32-20 = 12
Fixed cost = 240000
break-even = 240000/12 = 20000

Margin units = 36-20 = 16
Fixed cost = 240000
New break-even = 240000/16 = 15000

20000 units and 15000 units

Answer 2

12