Homework Answers
Answer-option "d" ($ 36000)
As per the above question if selling price reduced by 10% the new break-even sales is $36000
working note
1.computation of PV ratio as per question from BEP equation
BEP =FIXED COST /PV RATIO
$20,000=$4000/PV RATIO
SO PV Ratio is - 20%
2.Computaion of variable cost
contribution p.u =selling price *PV ratio
20*20% =$ 4 p.u
So Variable cost =selling price p.u - contribution p.u
$20 p.u -$ 4 p.u = $ 16.
3.if selling price reduced by 10% the revised PV ratio is
contribution P.U = selling price p.u - variable cost p.u
$20-($20*10%)-$16=$2 p.u
Revised PV ratio =contribution p.u/salling price p.u *100
( $2p.u/$18p.u)*100=11.11111%
4.Revised BEP sales
fixed cost / PV ratio
$4000/11.11111%=$36000
5.Remaining options are not valid for this question.option (d) is the correct one.
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Conley Company has fixed costs of $17,802,000.
The unit selling price, variable cost per unit, and
contribution margin per unit
for the company’s two products follow:
Product Model
Selling Price
Variable Cost per Unit
Contribution Margin per Unit
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$180
$99
$81
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135
90
The sales mix for products Yankee and Zoro is 80% and 20%,
respectively. Determine the break-even point in
units of Yankee and Zoro.
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