Moe's Garage management has budgeted the following amounts for its next fiscal year:

If Moe's can reduce fixed expenses by $20,000,by how much can variable expenses per unit increase and still allow the company to maintain the original breakeven sales in units?

Question

Moe's Garage management has budgeted the following amounts for its next fiscal year:

If Moe's can reduce fixed expenses by $20,000,by how much can variable expenses per unit increase and still allow the company to maintain the original breakeven sales in units?

Quizplus · Accepted Answer

C)
Sales $45.00
Less Variable expenses 25.00
Contribution Margin $20.00
Fixed expense $500,000 / $20 = 25,000 BE Units
Reduction $20,000 / 25,000 units = $ 0.80

Moe's Garage Management Has Budgeted the Following Amounts for Its