Trimble Company sells an electronic toy for $40. The variable cost is $24 per unit and the fixed cost is $32,000 per year.

Management is considering the following changes:

Alternative #1: Keep the current situation.

Alternative #2: Increase selling price 10 percent to counteract an expected 25 percent increase in fixed cost.

Alternative #3: Reduce fixed cost by 25 percent by moving to a lower rent location. This would have the effect of increasing variable costs by 10 percent.

Required:

Round calculations to the nearest unit.

(a) Determine the current break-even point in units and dollars.

(b) Determine the break-even point in units and dollars assuming alternative #2.

(c) Determine the break-even point required in units and dollars assuming alternative #3.

(d) Make an assessment of the best alternative.

Current Break Even Point in Units = Fixed Costs I Contribution Margin per Unit Fixed Costs per Year Margin in Units Break Even Units Units per Year Break Even Point in Dollars = Fixed Costs I Contribution Margin Ratio Fixed Costs per Year Contribution Ratio Break Even Dollars Yearly:r Sales Dollars Alternative 2 Break Even Point in Units = Fixed Costs I Contribution Margin per Unit Fixed Costs per Year Margin in Units Break Even Units Units per Year Break Even Point in Dollars = Fixed Costs I Contribution Margin Ratio Fixed Costs per Year Contribution Ratio Break Even Dollars Yearly Sales Dollars Alternative 3 Break Even Point in Units = Fixed Costs I Contribution Margin per Unit Fixed Costs Margin in Units Break Even Units per Year Units per Year Break Even Point in Dollars = Fixed Costs I Contribution Margin Ratio Fixed Costs Contribution Ratio Break Even Dollars per Year Yearly Sales Dollars