Santa Fe Production sells a single product to wholesalers. The company\'s budget

Question

Santa Fe Production sells a single product to wholesalers. The company's budget for the upcoming year revealed anticipated unit sales of 31,600, a selling price of $20, variable cost per unit of $8, and total fixed costs of $360,000. If Santa Fe's unit sales are 200 units less than anticipated, its break-even point will:

decrease by $12 per unit sold.

decrease by $8 per unit sold.

increase by $12 per unit sold.

increase by $8 per unit sold.

not change.

decrease by $12 per unit sold.

decrease by $8 per unit sold.

increase by $12 per unit sold.

increase by $8 per unit sold.

not change.

Explanation / Answer

1) earlier BEP = FC/(SP-VC)

= 360000/(20-8)

=360000/12 = 30000units

2) new BEP = 30000units

There will be no change in BEP by changing anticipated units sales.

option (E) no change

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