Question

A product sells for $30 per unit and has variable costs of $17.75 per unit. The fixed costs are $967,750. If the variable costs per unit were to decrease to $15.50 per unit, fixed costs increase to $1,145,500, and the selling price does not change, break-even point in units would:

Answer 1

not change

Explanation:

BEP (Units) = Fixed cost / (Unit selling price - Unit variable cost)

BEP (Units) Before the change is : 967750/ (30-17.75) = 79000 units

BEP (Units) after the change is: 1145500/(30-15.5) = 79000 units

--> BEP (Units) does not change

Step-by-step explanation:

Answer 2

not change

Step-by-step explanation:

BEP (Units) = Fixed cost / (Unit selling price - Unit variable cost)

BEP (Units) Before the change is : 967750/ (30-17.75) = 79000 units

BEP (Units) after the change is: 1145500/(30-15.5) = 79000 units

--> BEP (Units) does not change