Beasley Company currently sells its products for $35 per unit

Accounting Mar 02, 2021

Beasley Company currently sells its products for $35 per unit. Management is contemplating a 20% increase in the selling price for the next year. Variable costs are currently 50% of sales revenue and are not expected to change in dollar amount on a per unit basis next year (the company will pay the same amount for variable costs next year). Fixed expenses are $79,625 per year.

What is the breakeven point in units at the anticipated selling price per unit next year?

A) 1,338 units

B) 3,250 units

C) 3,520 units

D) 7,583 units

Expert Solution

Answer: B

Explanation: B)

Selling Price $35

× Variable costs % × 50%

= Variable costs $17.50

Selling Price $35

Increase × 1.20

Adj. Selling Price $42

Less Variable costs 17.50

= Contribution Margin $24.50

Fixed Expense $79,625 / $24.50 = 3,250 Break Even

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