Question

# A product has a contribution margin of \$9 per unit and a selling price of \$55...

A product has a contribution margin of \$9 per unit and a selling price of \$55 per unit. Fixed costs are \$27,000. Assuming new technology increases the unit contribution margin by 50 percent but increases total fixed costs by \$16,200, what is the new breakeven point in units?

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Answer #1
 New Break-even point in units = 3,200 units Workings: Existing New Contribution margin per unit \$             9 \$    13.50 (\$9 X 1.50) Fixed cost 27000 43200 (\$27000 + \$16200) New Break-even point in units = Fixed costs / contribution margin = \$43200 / \$13.50 = 3,200 units
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