Answer:
Step-by-step explanation:
Break even point in accounting and economics is the point at which the total cost of producing goods and total revenue are equal i.e the point a business does not experience either loss or gain.
Break even Analysis is basically used in determining the number of units or dollars of revenue needed to cover total costs.
from the above analysis we are asked to find breakeven in dollars and units.
to find Breakeven in units = FIXED COSTS / (SALES PRICE PER UNIT - VARIABLE COSTS PER UNITS)
fixed costs remains the same = $27, 136
the company enacted 10% increase in the
new sales price per unit will be ( 100 + 10% = 110% 1.1
( 1.1 x 130 ) = 141.
new variable price per unit = ( 1.1 x 98) = 107.8
breakeven in units = 27,136 / ($141 - $107.8)
27,136/ 33.2 = $817.349 , to nearest whole number = 817.35
breakeven in dollars = Fixed price / Contribution Margin
since, 10% increment has been enacted, our contribution margin would change too.
we then calculate contribution margin with the formula
(Sale price per dollar– Variable costs per dollar)
sale price = 1.1 x 124800 = 137,800
variable cost per dollar = 1.1 x 94080 = 103,488
contribution margin = 137800 - 103488 = 34,312.
break even in dollar = fixed price / contribution margin
27136/ 34312 = $0.790