Saucier & Co. currently sells 2,200 units a month for total monthly sales of $86,500. The company is considering replacing its current cash only credit policy with a net 30 policy. The variable cost per unit is $18 and the monthly interest rate is 1.2 percent. What is the switch break-even level of sales? Assume the selling price per unit and the variable costs per unit remain constant.

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Quizplus · Accepted Answer

Break-even point = QF1F1F1S1F1F1F10 - 2,200 = ($86,500)/{[(($86,500/2,200) - $18)/0.012] - $18} = 49 units; QF1F1F1S1F1F1F10 = 2,200 + 49 = 2,249 units