In 2015, X Company had the following selling price and per-unit variable cost in

Question

In 2015, X Company had the following selling price and per-unit variable cost information:

In 2015, fixed overhead costs were $359,000, and fixed selling and administrative costs were $256,000.

In 2016, there are only two expected changes. Direct material costs are expected to increase by 10% per unit, and fixed selling and administrative costs are expected to increase by $20,000. What must unit sales be in order for X Company to break even in 2016?

Selling price $167.80 Direct materials 31.40 Direct labor 28.60 Variable overhead 34.60 Variable selling and administrative 28.80

Explanation / Answer

Calculation OF the number of units for Break Even Selling Price 167.8 Direct Material 31.40*110% 34.54 Direct Labour 28.6 Variable Overheads 34.6 Variable Selling & Administrative 28.8 Contribution Margin 41.26 Fixed Costs Fixed Overhead Costs 359000 Fixed Selling & Admin Cost 276000 Total 635000 Break Even = Fixed Cost/ Contribution per unit = 635000/41.26 15390.21 Break Even Point is 15391 units approximately

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