Answer:
The break even point in units will remain unchanged
Step-by-step explanation:
The formula to compute the break even point is shown below:
= (Fixed cost) ÷ (Contribution margin per unit)
where,
Contribution margin per unit = Selling price per unit - Variable expense per unit
= $5.80 - $3.80
= $2.00
And, the fixed cost is $31,000
So, the break even point would be
= ($31,000) ÷ ($5.8 - $3.8)
= $31,000 ÷ $2
= 15,500 units
Now if the variable cost per unit is decreased and the fixed cost is increased so the break even would be
= (Fixed cost) ÷ (Contribution margin per unit)
where,
Contribution margin per unit = Selling price per unit - Variable expense per unit
= $5.80 - $3.60
= $2.20
And, the fixed cost is $31,000 + $3,100 = $34,100
So, the break even point would be
= ($34,100) ÷ ($5.80 - $3.60)
= $34,100 ÷ $2.20
= 15,500 units
The break even point in units will remain unchanged