Ask Question
27 August, 12:06

Grosheim Incorporated has fixed expenses of $211,500 per year. Right now, Grosheim Incorporated is selling its products for $100 per unit. Management is contemplating a 20% increase in the selling price for the next year. Variable costs are currently 40% of sales revenue and are not expected to change in dollar amount on a per unit basis next year (the company will pay the same amount for variable costs next year). If fixed costs increase 10% next year, and the new selling price per unit goes into effect, how many units will need to be sold to breakeven?

+3
Answers (1)
  1. 27 August, 12:16
    0
    Breakeven in units is 3231

    Explanation:

    Breakeven units=fixed costs/contribution margin per unit.

    new selling price=$100 * (1+20%) = $120

    variable cost per unit=$120*40%=$48

    contribution margin=selling price per unit-variable cost per unit

    contribution margin per unit=$120-$48=$72

    fixed costs next year=$211,500 * (1+10%) = $232,650.00

    breakeven units=$232,650.00/$72=3231
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Grosheim Incorporated has fixed expenses of $211,500 per year. Right now, Grosheim Incorporated is selling its products for $100 per unit. ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers