YY Company has the following information available: If variable costs increase to $65 per unit and fixed costs increase $200,000,what is the break-even point in units?
A)11,273
B)12,000
C)20,000
D)17,714

Question

YY Company has the following information available:  If variable costs increase to $65 per unit and fixed costs increase $200,000,what is the break-even point in units?
A)11,273 
B)12,000 
C)20,000 
D)17,714

Quizplus · Accepted Answer

To calculate the break-even point, we can use the formula:

Break-even point (in units) = Fixed costs / (Price per unit - Variable costs per unit)

Using the given information, we can solve for the original break-even point:

Break-even point = 300,000 / (80 - 50) = 10,000 units

Now, with the new information, we can calculate the new break-even point:

Break-even point = (300,000 + 200,000) / (80 - 65) = 17,714 units

Therefore, the answer is D, and the break-even point has increased from 10,000 to 17,714 units due to the increase in variable and fixed costs.

YY Company Has the Following Information Available: If Variable