Question

# Break-Even Sales Currently, the unit selling price of a product is \$230, the unit variable cost...

Break-Even Sales

Currently, the unit selling price of a product is \$230, the unit variable cost is \$190, and the total fixed costs are \$448,000. A proposal is being evaluated to increase the unit selling price to \$260.

a. Compute the current break-even sales (units).
units

b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased to the proposed \$260, and all costs remain constant.
units

Break-even sales (Units) = Fixed Costs/ (Sales price per unit - Variable Costs per unit)

a. Break-even Sales (Units) = 11,200 Units

Explanation

Calculation of Break-even sales (Units)

 Particulars Amount (\$) Fixed Costs 448,000 Selling Price per unit 230 Variable cost per unit 190 Break-even Sales Units (448000/(230-190) 11,200

b. Break-even Sales (Units), if the selling price is \$ 260 per unit = 6,400 Units

Calculation of Break-even sales (Units)

 Particulars Amount (\$) Fixed Costs 448,000 Selling Price per unit 260 Variable cost per unit 190 Break-even Sales Units (448,000/(260-190) 6,400

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