Balmoral Company management has budgeted the following amounts for its next fiscal year:
If Balmoral Company increases fixed expenses by $3,600, how will break-even sales in units be affected?

Question

Balmoral Company management has budgeted the following amounts for its next fiscal year:  
If Balmoral Company increases fixed expenses by $3,600, how will break-even sales in units be affected?

Quizplus · Accepted Answer

The formula for break-even sales in units is:

Break-even sales in units = Fixed expenses / (Selling price per unit - Variable expenses per unit)

Since increasing fixed expenses by $3,600 will not affect the selling price per unit or variable expenses per unit, we can simply calculate the new break-even sales in units by adding the $3,600 to the original fixed expenses amount and plugging into the formula:

New break-even sales in units = ($32,400 + $3,600) / ($165 - $90) = 240 units

Therefore, break-even sales in units will increase by 240 units if fixed expenses are increased by $3,600.

Balmoral Company Management Has Budgeted the Following Amounts for Its