Deen Enterprises currently sells its products for $1,200 per unit.Management is contemplating a 10% 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 $147,000 per year.
What is the breakeven point in units at the anticipated selling price per unit next year?

Question

Quizplus · Accepted Answer

A)
Sales price $1,200
× increase × 1.10%
New Sales Price $1,320
Sales Price $1,200 × 40%
Variable % = $480 Variable costs
Sales Price $1,320
Less Variable costs 480
Contribution Margin $840
Fixed exp $147,000 / $840 CM = 175 BE units

Deen Enterprises Currently Sells Its Products for $1,200 Per Unit