Omega Inc.is expecting a reduction of $25,000 in fixed costs of $725,000.What will be the change in break-even sales (in units), if selling price per unit is $50 and the unit variable cost is $35?
A) 48,333 units
B) 46,667 units
C) 1,667 units
D) 2,500 units

Question

Quizplus · Accepted Answer

The change in break-even sales in units due to a reduction in fixed costs can be calculated using the formula for break-even point in units, which is Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). With a $25,000 reduction in fixed costs, the new break-even point will be lower. The difference in break-even points is $25,000 / ($50 - $35) = $25,000 / $15 = 1,667 units.

Omega Incis Expecting a Reduction of $25,000 in Fixed Costs of of $725,000.What