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 sales (units)if the variable costs are decreased by $4?

Question

Quizplus · Accepted Answer

With the decrease in variable costs by $4, the new variable cost per unit becomes $16 ($20 - $4). The contribution margin per unit is the selling price minus the new variable cost, which is $29 - $16 = $13. The break-even point in units is the fixed costs divided by the contribution margin per unit, which is $350,000 / $13 = 26,923 units.

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