Solution 1:
Break even point in units sales = Fixed cost/ Contribution margin per unit
= $116100 / (90-63) = 116100 / 27 = 4300 units
Break even point in Dollar sales = 4300*$90 = $387,000
Solution 2:
If variable expense increase then Contribution margin per unit will decrease. therefore it will result in a "Higher break even point".
Solution 3:
Outback Outfitters | ||||
Contribution Income statement | Present | Proposed | ||
18000 | stoves | 22500 | stoves | |
Total | Per unit | Total | Per unit | |
Sales | $16,20,000 | $90 | $18,22,500 | $81 |
variable expense | $11,34,000 | $63 | $14,17,500 | $63 |
Contribution Margin | $4,86,000 | $27 | $4,05,000 | $18 |
Fixed Expense | $1,16,100 | $1,16,100 | ||
Net Operating Income | $3,69,900 | $2,88,900 |
Solution 4:
Number of stoves to be sold = ($116100+$75000) / ($81- $63)
= $191100 / $18
= 10,617
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please explain
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