Elk Manufacturing has budgeted the following amounts for its next fiscal year:

To maintain the original breakeven sales in units if fixed expenses were to increase by 20%,the selling price per unit would have to be

Question

Elk Manufacturing has budgeted the following amounts for its next fiscal year:

To maintain the original breakeven sales in units if fixed expenses were to increase by 20%,the selling price per unit would have to be

Quizplus · Accepted Answer

B)
Current Sales price $80
Variable expense 20
Contribution margin 60
Fixed expenses $425,000
Units 7,083.33 (425,000 / 60ea )
New Fixed expense $510,000 (425,000 plus 20% increase)
Contribution margin 72 (510,000 / 7,083.33 units)
Plus variable expenses 20
New Selling price 92
Divided by Old Sales Price 80
Percentage increase 15%

Elk Manufacturing Has Budgeted the Following Amounts for Its Next