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 $351,000, and fixed selling and administrative costs were $278,000.

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

Selling price $174.10 Direct materials 39.20 Direct labor 10.40 Variable overhead 35.40 Variable selling and administrative 13.30

Explanation / Answer

2015 2016 Selling price $174.10 $174.10 Direct materials 39.2 43.12 Direct labor 10.4 10.4 Variable overhead 35.4 35.4 Variable selling and administrative 13.3 13.3 Total variable cost 98.3 102.22 Contribution margin per unit $75.80 $71.88 fixed overhead costs 351000 351000 fixed selling and administrative 278000 288000 Total fixed cost 629000 639000 Break even unit sales 8298 8890 units

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