Reynold's Grocery has fixed costs of $350,000, the unit selling price is $29, and the unit variable costs are $20.What is the break-even sale units if the variable costs are decreased by $4?
A)26,923 units
B)12,069 units
C)21,875 units
D)38,889 units

Question

Quizplus · Accepted Answer

Explanation:The break-even point is the point at which total revenue equals total costs. Total revenue is equal to the unit selling price multiplied by the number of units sold. Total costs are equal to the fixed costs plus the variable costs. The variable costs are equal to the unit variable costs multiplied by the number of units sold.If the variable costs are decreased by $4, then the new unit variable costs will be $20 - $4 = $16. The new break-even point will be the point at which total revenue equals total costs, where total costs are equal to the fixed costs plus the new variable costs multiplied by the number of units sold.The new break-even point can be calculated as follows:Break-even point = Fixed costs / (Unit selling price - Unit variable costs)Break-even point = $350,000 / ($29 - $16)Break-even point = 26,923 unitsTherefore, the break-even sale units if the variable costs are decreased by $4 is 26,923 units.

Reynold's Grocery Has Fixed Costs of $350,000, the Unit Selling