For the current year ending January 31, Harp Company expects fixed costs of $188
ID: 2565737 • Letter: F
Question
For the current year ending January 31, Harp Company expects fixed costs of $188,500 and a unit variable cost of $51.50. For the coming year, a new wage contract will increase the unit vanable cost to SSS 50. The seling price of 170.00 per unit is expected to remain the same. required, round your answer to the nearest whole unit. O a. Compute the break-even sales (units) for the current year b. Compute the anticipated break-even sales (units) for the coming year, assuming the new wage contract is signed unitsExplanation / Answer
a. Break Even Sales (Units ) = Fixed Cost/ Contribution Per Unit
= Fixed Cost/ (Sales Price Per Unit - Variable Cost Per Unit)
= $ 188,500 / ( $ 70 - $ 51.50)
= 10,189 units (approx)
Note : The answer is rounded off to the nearest whole Number.
b.
Break Even Sales (Units ) = Fixed Cost/ Contribution Per Unit
= Fixed Cost/ (Sales Price Per Unit - Variable Cost Per Unit)
= $ 188,500 / ( $ 70 - $ 55.50)
= 13,000 Units