In 2010, Runge Company had a break-even point of $800,000 based on a selling price of $10 per unit and fixed costs of $240,000. In 2011, the selling price and variable costs per unit did not change, but the break-even point increased to $900,000.
Instructions
(a) Compute the variable cost per unit and the contribution margin ratio for 2010.
(b) Using the contribution margin ratio, compute the increase in fixed costs for 2011.

Question

Quizplus · Accepted Answer

The Answer of In 2010, Runge Company had a break-even point of $800,000 based on a selling price of $10 per unit and fixed costs of $240,000. In 2011, the selling price and variable costs per unit did not change, but the break-even point increased to $900,000.
Instructions
(a) Compute the variable cost per unit and the contribution margin ratio for 2010.
(b) Using the contribution margin ratio, compute the increase in fixed costs for 2011.

In 2010, Runge Company Had a Break-Even Point of $800,000