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 $360,000, and fixed selling and administrative costs were $288,000.

In 2016, there are only two expected changes. Direct material costs are expected to decrease by 20% per unit, and fixed selling and administrative costs are expected to decrease by $15,000. What must unit sales be in order for X Company to break even in 2016?

Please help with the problem! I can not get it.

Selling price $190.00 Direct materials 30.80 Direct labor 16.60 Variable overhead 30.00 Variable selling and administrative 15.40

Explanation / Answer

Fixed expense in 2016 = 360000 + 273000 = $633000

Variable cost per unit = 24.64+16.60+30+15.4 = 86.64

Contribution per unit = 190 -86.64 = 103.36

No of units to be sold to reach Break even = 633000/103.36 = 6125 units

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.