The following information is for Donald Corporation: $\begin{array}{lr}
\text { Total fixed costs } & \$ 333,500 \
\text { Variable costs per unit } & \$ 99 \
\text { Selling price per unit } & \$ 154
\end{array}$ If total fixed costs increased to $394,850, then break-even volume in dollars would increase by _____.
A)10.0%
B)12.3%
C)18.4%
D)34.3%

Question

Quizplus · Accepted Answer

The break-even point in units is calculated by dividing total fixed costs by the contribution margin per unit (selling price per unit minus variable cost per unit). Initially, the break-even point is $333,500 / ($154 - $99). After the increase in fixed costs, it becomes $394,850 / ($154 - $99). The percentage increase in break-even volume in dollars is calculated by comparing these two values, resulting in an 18.4% increase.

The Following Information Is for Donald Corporation If Total Fixed Costs Increased to $394,850, Then Break-Even Volume