Exercise 19-13

Cost Behavior and Cost-Volume-Profit Analysis Warren / Reeve / Duchac Exercise 19-13 solution

Break-even sales

Currently, the unit selling price of a product is $280, the unit variable cost is $230, and the total fixed costs are $525,000. A proposal is being evaluated to increase the unit selling price to $300.

a. Compute the current break-even sales (units).
10,500 units

b. Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant.
7,500 units