For the past year, Hornbostel Company had fixed costs of $6,552,000, a unit variable cost of $444, and a unit selling price of $600. For the coming year, no changes are expected in revenues and costs, except that a new wage contract will increase variable costs by $6 per unit. Determine the break-even sales (units) for the following:

Question

For the past year, Hornbostel Company had fixed costs of $6,552,000, a unit variable cost of $444, and a unit selling price of $600. For the coming year, no changes are expected in revenues and costs, except that a new wage contract will increase variable costs by $6 per unit. Determine the break-even sales (units) for the following:
a.  Past year 	units
b.  Coming year 	units

Chol · Answer

Past year units 6552000/(600-444) = 42000 units Coming year units 655200/ (600-450) = 43680 units

elise · Answer

Currently, the unit selling price is $50, the variable cost, $34, and the total fixed costs, $106,000. A proposal is being evaluated to increase the selling price to $54.