The following information is available for Trump Corporation:
$\begin{array}{ll}
\text { Total fixed costs }&\$300,000\
\text { Variable costs per unit } & \$ 100 \
\text { Selling price per unit } & \$ 200
\end{array}$
If total fixed costs increased to $600,000,then the break-even volume in dollars would increase by ________.
A) 10.0%
B) 50.0%
C) 100%
D) 200%

Question

Quizplus · Accepted Answer

The break-even volume in dollars is calculated using the formula: Break-even volume = Fixed Costs / (Selling Price per Unit - Variable Cost per Unit). Initially, the break-even volume is $300,000 / ($200 - $100) = $300,000 / $100 = 3,000 units. When fixed costs increase to $600,000, the new break-even volume becomes $600,000 / $100 = 6,000 units. In terms of dollars, initially, it was 3,000 units * $200 = $600,000. After the increase, it is 6,000 units * $200 = $1,200,000. The increase from $600,000 to $1,200,000 is 100%.

The Following Information Is Available for Trump Corporation If Total Fixed Costs Increased to $600,000,then the Break-Even Volume