Merced Corporation has provided the following budgeted data:
-If the selling price is raised by $5 per unit, the break-even point in units will be:

Question

Merced Corporation has provided the following budgeted data: 
-If the selling price is raised by $5 per unit, the break-even point in units will be:

Quizplus · Accepted Answer

The correct answer is A because the break-even point in units is calculated by dividing the fixed costs by the contribution margin per unit. If the selling price is raised by $5 per unit, the contribution margin per unit will increase by $5. This will result in a lower break-even point in units.

Merced Corporation Has Provided the Following Budgeted Data