Crossroads Packaging Co.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 10%,the selling price per unit would have to be

Question

Crossroads Packaging Co.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 10%,the selling price per unit would have to be

Quizplus · Accepted Answer

A)
Current Sales price $4.00
Variable expense 3.20
Contribution margin 0.80
Fixed expenses $80,000
Units 100,000 (80,000 / 0.80ea )
New Fixed expense $88,000 (80,000 plus 10% increase)
Contribution margin 0.88 (88,000 / 100,000 units)
Plus variable expenses 3.20
New Selling price 4.08
Divided by Old Sales Price 4.00
Percentage increase 2.00%