In 2018, Wollongong Manufacturing had a break-even point of $800,000 based on a selling price of $10 per unit and fixed costs of $320,000. In 2019, the selling price and variable costs per unit did not change, but the break-even point increased to $950,000.
Instructions:
(a) Compute the variable cost per unit and the contribution margin ratio for 2018.
(b) Using the contribution margin ratio, compute the increase in fixed costs for 2019.

Question

In 2018, Wollongong Manufacturing had a break-even point of $800,000 based on a selling price of $10 per unit and fixed costs of $320,000. In 2019, the selling price and variable costs per unit did not change, but the break-even point increased to $950,000.
Instructions: 
(a) Compute the variable cost per unit and the contribution margin ratio for 2018.
(b) Using the contribution margin ratio, compute the increase in fixed costs for 2019.

Quizplus · Accepted Answer

The Answer of In 2018, Wollongong Manufacturing had a break-even point of $800,000 based on a selling price of $10 per unit and fixed costs of $320,000. In 2019, the selling price and variable costs per unit did not change, but the break-even point increased to $950,000.
Instructions: 
(a) Compute the variable cost per unit and the contribution margin ratio for 2018.
(b) Using the contribution margin ratio, compute the increase in fixed costs for 2019.

In 2018, Wollongong Manufacturing Had a Break-Even Point of $800,000