The Cellar Door currently sells 9,620 units a month for total monthly sales of $316,000.The company is considering replacing its current cash only credit policy with a net 30 policy.The variable cost per unit is $15 and the monthly interest rate is 1.5 percent.What is the switch break-even level of sales?
A)9,711 units
B)9,779 units
C)9,814 units
D)9,957 units
E)9,889 units

Question

Quizplus · Accepted Answer

Break-even point = Q′ - 9,620 = ($316,000)/{[(($316,000/9,620) - $15)/0.015] - $15} = 269 units; Q′ = 9,620 + 269 = 9,889 units

The Cellar Door Currently Sells 9,620 Units a Month for Total