Barnam Company currently produces and sells 4,000 units of a product that has a

Question

Barnam Company currently produces and sells 4,000 units of a product that has a contribution margin of $5 per unit. The company sells the product for a sales price of $20 per unit. Fixed costs are $20,000. The company has recently invested in new technology and expects the variable cost per unit to fall to $12 per unit. The investment is expected to increase fixed costs by $15,000. Before the new investment was made, how many units had to be sold to break-even? (Do not round intermediate calculations.)

Explanation / Answer

Barnam Company Break Even Analysis Details Amt $/Qty Unit Before the new Investment : a Contribution Margin per unit 5 b Fixed cost                           20,000 c Break Even units= b/a=                             4,000 So the Break even units before new investment was 4,000 units

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