Question
Baldwin’s product Bold has material costs that are rising from $6.82 to $7.82. Assume that period costs and other labor costs remain unchanged. If Baldwin decides to absorb the cost and not pass any on to its customers in the form of raised prices how many units of product Bold would need to be sold next round to break even on the product?
A. 854
B. 970
C. 1,019
D. 1,021
Baldwin’s product Bold has material costs that are rising from $6.82 to $7.82. Assume that period costs and other labor costs remain unchanged. If Baldwin decides to absorb the cost and not pass any on to its customers in the form of raised prices how many units of product Bold would need to be sold next round to break even on the product?
A. 854
B. 970
C. 1,019
D. 1,021
Name Segment Sold tory Revision Date Dec.31 MTBF Coord Coord Price Cost Cost Marg time Round Round Utiliz Abby Nano 1.544 337 7/23/2020 1.422000 13.9 3.2 S38.50 $12.63$7.45 47% 90% 7.0 1.500 18896 1 Alan Elite 1.636 246 7/23/2020 1.426000 16.8 6.1$40.50 $13.69$7.45 47% 90% 7.0 1.500 188% Agape Core 1.715 370 8/29/2020 1.520000 11.6 8.6$28.00 s9.20 s3.08 51% 3% 8.5 1.500 102% Bold Thrift 970 295 12/19/2020 2.214000 9.5 10.5 $17.00 $6.82 $1.80 51% 0% 10.0 1.250 79% 0 ?12/2020 1.819000 8.9 11.2 $19.50 S7.00$2.43 52% 0% 9.0 1.500 9996 Buddy Core 1.856 222 12/7/2018 3.118000 10.4 9.6$19.00 $8.14 $4.00 33% 30% 10.0 1.500 129% Nano 1.148 290 12/16/2020 1.018000 13.9 3.4 $30.00 $12.74 $7.00 34% 53% 7.0 775 245 12/16/2020 1.020000 17.0 5.9 $36.00 $13.59 S6.18 43% 6% 7.0 Core 1.575 108 12/24/2020 0.916000 11.8 8.1$21.00 $9.31 $5.70 30% 63% 8.0 1.040182% ? 2/10:2020 0.918000 11.5 8.5$22.00 $9.03 $4.47 38% 100% 8.0 1.040 176% Coat Nano 1.899 108 11/4/2020 1.223000 14.5 3.5 $34.00 $13.88$7.91 38% 100% 7.0 1.150 198% Cure Elite 1.239 173 8/23/2020 1.925000 17.3 5.5 S34.00 $14.56s6.54 36% 41% 7.0 7/2/2020 1.323000 15.0 3.0$37.00 $14.04 $7.17 40% 35% 7.0 1.200 134% Cent Elite 1.408 448 7/24/2020 1.325000 17.1 5.2 S37.00 $14.57 $7.27 38% 41% 7.0 1.300 140% Thrift 1.952 127 6/10:2021 3.717000 8.8 11.2 $16.00 S6.80 S2.94 37% 45% 10.0 1.450 143% Dune Thrift 2.089 249 6/10:2021 3.617000 9.0 11.0 $18.00 $6.96 $2.89 35% 38% 10.0 1.600 136% Daze Core 1.597 280 12/16/2019 2.118000 11.9 7.5$24.00 $9.7254.57 3896 67% 8.0 1.150 165% Deft Core 1.778 316 12/18/2019 2.120000 12.6 8.0 $24.00 $10.36$4.49 35% 56% 8.0 1.350 154%
Explanation / Answer
When we are calculating break-even there is no question of unsold amount and hence the inventory cost will be irrelevant.
Let 'B' be the break-even quantity.
At breakeven, Sales($) - Variable Cost($) - Period Cost($) = 0
or, 17B - (7.82+1.8)B - 7161 = 0
or, B = 7161/(17 - 9.62) = 970
