Beasley Company currently sells its products for $35 per unit.Management is contemplating a 20% increase in the selling price for the next year.Variable costs are currently 50% of sales revenue and are not expected to change in dollar amount on a per unit basis next year (the company will pay the same amount for variable costs next year).Fixed expenses are $79,625 per year.
What is the breakeven point in units at the anticipated selling price per unit next year?

Question

Quizplus · Accepted Answer

B)
Selling Price $35
× Variable costs % × 50%
= Variable costs $17.50
Selling Price $35
Increase × 1.20
Adj.Selling Price $42
Less Variable costs 17.50
= Contribution Margin $24.50
Fixed Expense $79,625 / $24.50 = 3,250 Break Even

Beasley Company Currently Sells Its Products for $35 Per Unit