Question
Beliot corporation has the following information related to its manufacturing and selling of its manufacturing and selling of computers back-up hand drives. Current selling price
Beliot corporation has the following information related to its manufacturing and selling of its manufacturing and selling of computers back-up hand drives.
Current selling price per unit. $80.00
Direct materials per unit. $15.00
Direct labor per unit. $5.00
Variable manufacturing overheads per unit. $10.00
Fixed manufacturing overheads. $200,000
Fixed operating expenses $50,000
Analysts compute the break-even point using the above information, and conclude that production capacity and estimated sales can reach that point.
However, a few days later, the analyst learns that variable costs will increase by 5%.
What is the effect on the original break-even point of this change?
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