Question

A product has a contribution margin of $9 per unit and a selling price of $35 per unit. Fixed costs are $45,000. Assuming new technology increases the unit contribution margin by 60 percent but increases total fixed costs by $16,200, what is the new breakeven point in units

Answer 1

Answer:

4250

Explanation:

New breakeven point in units = New fixed cost / (New unit selling price - New unit variable cost)

Note: New unit selling price - New unit variable cost = New unit contribution margin

=  (45000+ 16200) / (9x 1.6)

= 4250 units