Question

Kent Manufacturing produces a product that sells for $61.00 and has variable costs of $34.00 per unit. Fixed costs are $297,000. Kent can buy a new production machine that will increase fixed costs by $22,300 per year, but will decrease variable costs by $4.00 per unit. Compute the revised break-even point in units if the new machine is purchased.

Answer 1

Answer:

break-even point  = 79825 units

Explanation:

given data

sells = $61.00

variable costs = $34.00 per unit

Fixed costs = $297,000

increase fixed costs = $22,300 per year

decrease variable costs = $4.00 per unit

to find out

revised break-even point in units

solution

we get here break-even point taht is express as

break-even point = Fixed costs ÷ CM per unit   ...........1

put here value we get

break-even point = $\frac{297000+22300}{34-(34-4)}$

break-even point = $\frac{319300}{4)}$

break-even point  = 79825 units