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Homework answers / question archive / Boss Enterprises currently sells its products for $40 per unit
Boss Enterprises currently sells its products for $40 per unit. Management is contemplating a 40% increase in the selling price for the next year. Variable costs are currently 40% of sales revenue and are not expected to change next year. Fixed expenses are $120,000 per year.
What is the breakeven point in units at the current selling price?
A) 5,000 units
B) 2,143 units
C) 24 units
D) 7,500 units
Answer: A
Explanation: A)
Sales price per unit $40.00
Variable costs 16.00 ($40.00 × 40 % of sales)
Contribution Margin 24.00
Fixed costs $120,000
Breakeven units 5,000 (120,000 / $24.00 CM)
