A company increased the selling price for its product from $5 to $6 per unit whe

Question

A company increased the selling price for its product from $5 to $6 per unit when total fixed expenses increased from $100,000 to $200,000 and variable expense per unit remained unchanged. How would these changes affect the break-even point?

A. The break-even point in units would increase.
B. The break-even point in units would decrease.
C. The effect can't be determined from the information given.
D. The break-even point in units would remain unchanged

***I said A, but that answer is wrong.. Please help!!***

Explanation / Answer

(c) from Example B below
BE/u changed from 1000 to 1082 see examples below
C. The break-even point in units would increase.



Examples B: increase in price
Figures.. dollars.... per unit.... ratio....units
Sales...3001500... 2001....100...1500
Var...1200000....800....39.98.....1500
CM...1801500....1201....60.02
Fixed.. 1,300,000.00
CM/u..=1201
BE/u... =1,082
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