Question

The Berry Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2% per period. Based on the following information, what is the break-even price per unit that should be charged under the new credit policy? Assume that the sales figure under the new policy is 4,900 units and all other values remain the same. (Round the final answer to 2 decimal places. Omit $ sign in your response.)

	Current Policy			New Policy
Price per unit	$	88		$	90
Cost per unit	$	48		$	48
Unit sales per month		4,700			4,900

Break-even price =  $

Answer 1

Price per unit=$90

Cost per unit-=$48

Units sales per month=4900

Required rate of return=2%

Break even point:

The break even calculation identifies the number of sales to be made, (in dollars or units), before all the business expenses are covered and profit begins (before tax).

If you know the unit's sale price and cost price and the business operating expenses you can calculate the number of units you need to sell before you start making a profit.

Formula is BEP in units = Fixed cost/ Selling price per unit- Variable cost per unit

To calculate the BEP, one must have the Fixed cost, variable cost and Selling price

But in the give problem there is no break up of costs given, Hence we can not calculate the BEP price or BEP in units or BEP in sales.