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    fustrated Posts: 18, Reputation: 2
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    #1

    Mar 25, 2007, 09:11 AM
    homework break-even take a look is this correct?
    Hi
    I would appreciate it if someone will check out my problem and see if I did it correctly, and if not help me out.
    Thanks

    The problem is:

    Currently, the unit selling price is $30, the variable cost, $14, and the total fixed costs, $96,000. A proposal is being evaluated to increase the selling price to $34.

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

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

    This is what I came up with, is this correct?
    a.)$96,000/16 =6,000 units
    b.)$34-14= $20 unit contribution margin, $96,000/$20=4800 units
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    Mar 25, 2007, 01:29 PM
    PART A
    Selling 30x
    VC 14x
    CM 16x
    Less Fixed Costs 96,000
    Net Income 0

    16x = 96,000
    x = 96,000/16 = 6,000 units

    PART B
    Selling 34x
    VC 14x
    CM 20x
    Less Fixed Costs 96,000
    Net Income 0

    20x = 96,000
    x = 96,000/20 = 4,800 units

    Conclusion
    Yes, your answers are correct.
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