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If the fixed cost increase $31,500 with no other cost or revenue factors changing, what is the break even sales in units? Explanation: Cost Fixed

If the fixed cost increase $31,500 with no other cost or revenue factors changing, what is the break even sales in units?

Explanation:

CostFixedVariable

Raw material$0$150,000

Direct labor$0$100,000

Factory costs$50,000$75,000

Selling and administrative costs$55,000$25,000

Total cost$105000$350,000

Total variable cost= $350,000

No. of units = 100,000

Variable cost per unit = $350,000 / 100,000

= $3.5 per unit

Sales (100,000 units)$500,000

No of units = 100,000

Selling price per unit = $500,000 / 100,000

= $5

Therefore contribution per unit = Sales - variable cost

= $5 - $3.5

= $1.5

Break even sales in unit = Fixed cost / Contribution margin per unit

Contribution margin = $1.5

Break even sales in unit = $105,000 / 1.5

= 70,000 units

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