Foggy Co. has the following operating data for its manufacturing operations: The
ID: 2348049 • Letter: F
Question
Foggy Co. has the following operating data for its manufacturing operations:The company has decided to increase the wages of hourly workers, which will increase the unit variable cost by 10%. Increases in the salaries of factory supervisors and property taxes for the factory will increase fixed costs by 4%. If sales prices are held constant, the break-even point for Flynn Co. will
unit selling price $250.00
unit variable cost $100
Total Fixed Cost $840,000
a.
increase by 800 units.
b.
decrease by 640 units.
c.
increase by 640 units.
d.
increase by 400 units.
Explanation / Answer
Old break-even point =$840,000/($250.00 - $100) =5600 New breakeven point = $840,000*1.04/($250.00 - $100*1.1) =6240 Difference = 640 units c. increase by 640 units.