The following information pertains to MacKenzie Corp.: Sales (22,500 units) $ 900,000 Fixed costs $ 350,000 Breakeven sales point, in dollars $ 700,000 If the sales price per unit were to decrease by 5% and variable expenses were to increase by $2.00 per unit, which of the following is true?
A. The new variable expenses are $21 per unit.B. The new breakeven point is $24,875 units.C. The new breakeven point is $825,000.D. The new selling price is $31 per unit.

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tahneetakhan tahneetakhan · Answer 1 · 2019-12-06T16:19:00+01:00

Answer:

None

Explanation:

Sales in units = 22,500

Sales in volume = $900,000

Break Even in Volume = $700,000

Fixed Cost = $350,000

and SP per unit will be = (900,000/22,500) = 40

Therefore, BE in Units = (700,000/40) = 17,500

and Contribution Margin (CM) per unit will be (Fixed Cost / BE in Units) = (350,000/17,500) = 20

and Variable Cost = SP - CM = 20

As per the scenario,

New SP per unit will be (40*.95) = 38, hence option D is not correct

New VC per unit will be (20+2) = 22, hence option A is not correct

New CM will be (38-22) = 16

New BE point in units will be (350,000/16) = 21,875, hence option B is not correct

New BE point in volume will be (21,875*16) = 831,250, hence option C is not correct