Homework Answers
Answer - (A) - 560 units
Computation
Break even point level with 20% increase in the sales revenue and 10% decrease in fixed expense
Sales price per unit $225 + (20% of $225)
Sales price = $225 + $45 = $270
Variable cost remain the same i.e 25% of $225 = $56.25
Contribution = Sales - V.C
= $270 - $56.25
Contribution per unit = $213.75
New Fixed cost = $133000 - (10% of $133000)
New F.C = $119700
Breakeven sales at this level would be = New F.C / contribution per unit
Breakeven sales = $119700 / $213.75
Breakeven sales = $560
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