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 $299,000.

1. 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 $10,000. What must unit sales be in order for X Company to break even in 2016?

please show your work thanks!

Selling price $167.70 Direct materials 32.10 Direct labor 20.20 Variable overhead 39.70 Variable selling and administrative 20.60

Explanation / Answer

Contribution margin for 2016:

Breakeven units = Total fixed cost / contribution margin per unit = 660,000 / 51.89 = 12, 720 units

$ Selling price 167.70 Direct materials 35.31 Direct labor 20.20 Variable overhead 39.70 Variable selling and administrative 20.60 Contribution margin per unit 51.89

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