Question

# In 2017, X Company had the following selling price and per-unit variable cost information: Selling price...

In 2017, X Company had the following selling price and per-unit variable cost information:
Selling price \$173
Variable manufacuting costs 81
Variable selling and administrative costs 24

In 2017, total fixed costs were \$743,000.

In 2018, there are only two expected changes. Direct material costs are expected to decrease by \$5 per unit, and fixed selling and administrative costs are expected to decrease by \$15,000. What must unit sales be in order for X Company to break even in 2018?

For the 2018 contribution margin and contribution margin ratio will be as under

 Per unit Per unit Percentage Selling price 173 100% Less: Variable cost Variable manufacturing costs(81-5) 76 Variable selling and administrative costs 24 Total Variable cost 100 57.80% Contribution margin 73 42.20%

calculation for the unit sales be in order for X Company to break even in 2018

= Fixed cost / contribution margin per unit

= (743000-15000) /73

=9972.60

=9972.60 units

the unit sales be in order for X Company to break even in 2018 =9972.60 units OR 9973 units