Saucier & Co.currently sells 2,100 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.
A)1,943 units
B)2,117 units
C)2,145 units
D)2,406 units
E)2,548 units

Question

Quizplus · Accepted Answer

Break-even point = Q′ - 2,100 = ($86,500)/{[(($86,500/2,100) - $18)/0.012] - $18} = 45 units; Q′ = 2,100 + 45 = 2,145 units