Boss Enterprises currently sells its products for $40 per unit.Management is contemplating a 40% increase in the selling price for the next year.Variable costs are currently 40% of sales revenue and are not expected to change next year.Fixed expenses are $120,000 per year.
What is the breakeven point in units at the current selling price?

Question

Quizplus · Accepted Answer

A)
Sales price per unit $40.00
Variable costs 16.00 ($40.00 × 40 % of sales)
Contribution Margin 24.00
Fixed costs $120,000
Breakeven units 5,000 (120,000 / $24.00 CM)

Boss Enterprises Currently Sells Its Products for $40 Per Unit