Homework Answers
Selling price = $155
Variable cost per unit = $120
Contribution Margin per unit = $35
Fixed cost = $84,000
Break even point (units) = fixed cost / Contribution margin per unit
Break even point (units) = $84,000 / $35
Break even point (units) = 2,400 units
If price and variable cost per unit increased by 25%,
price (155 * 125%) = $193.75
Variable cost (120 * 125%) = $150
Contribution margin per unit = $43.75
Desired sales = (Fixed cost + Desired profit) / Contribution Margin
Desired sales = ($84,000 + $260,000) / $43.75
Desired sales = 7,862.86
or Desired sales = 7,863 units
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