Answer:
(a) 10,625 units
(b) 8,500 units
Explanation:
(a) Contribution Per unit:
= Selling price - Variable cost
= $25 - $17
= $8
Current break-even sales (in units):
= Total Fixed costs ÷ Contribution Per unit
= $85,000 ÷ $8
= 10,625 units
(b) Assuming selling price per unit = $27
Contribution Per unit:
= Selling price - Variable cost
= $27 - $17
= $10
Anticipated break-even sales (in units):
= Total Fixed costs ÷ Contribution Per unit
= $85,000 ÷ $10
= 8,500 units