Question

Santa Fe Production sells a single product to wholesalers. The company's budget for the upcoming year revealed anticipated unit sales of 31,600, a selling price of $20, variable cost per unit of $8, and total fixed costs of $360,000. If Santa Fe's unit sales are 200 units less than anticipated, its break-even point will:

Answer 1

No change

Step-by-step explanation:

The computation of break-even point is given below:-

1) Earlier break even point

= Total cost ÷ (Selling cost - Variable cost)

= $360,000 ÷ ($20 - $8)

= $360,000 ÷ $12

= 30,000 units

2) New Break-even point = 30,000 units

Therefore, at break even point there will be no change by changing the anticipated sales unit.