Question

Cool Gafitas Inc. sells sunglasses. Last year the glasses sold for $ 35 each, with variable costs per goggle of $ 26 and fixed operating costs of $ 25,000. How many glasses does Cool Glasses have to sell this year to break even considering the aforementioned costs, given the following scenarios? All numbers remain the same as last year. (3 points) Fixed operating costs increase to $ 28,000, other items remain the same. (3 points) The sale price is increased to $ 37, all costs remain the same as last year. (3 points) The variable cost per glasses increases to $ 28., The other items remain the same as last year. (3 points)

Answer 1

Part 1

Selling price per unit = $35

variable cost per unit = $26

Fixed cost = $25,000

Break even point (Units ) = ?

Contribution margin per unit = Selling price per unit - variable cost per unit

= 35 - 26

= $9

Break even point (Units ) = Fixed cost/Contribution margin per unit

= 25,000/9

= 2,778 (Rounded to whole unit)

Part 2

Selling price per unit = $35

variable cost per unit = $26

Fixed cost = $28,000

Break even point (Units ) = ?

Break even point (Units ) = Fixed cost/Contribution margin per unit

= 28,0000/9

= 3,111 (Rounded to whole unit)

Part 3

Selling price per unit = $37

variable cost per unit = $26

Fixed cost = $25,000

Break even point (Units ) = ?

Contribution margin per unit = Selling price per unit - variable cost per unit

= 37 - 26

= $11

Break even point (Units ) = Fixed cost/Contribution margin per unit

= 25,000/11

= 2,273 (Rounded to whole unit)

Part 4

Selling price per unit = $35

variable cost per unit = $28

Fixed cost = $25,000

Break even point (Units ) = ?

Contribution margin per unit = Selling price per unit - variable cost per unit

= 35 - 28

= $7

Break even point (Units ) = Fixed cost/Contribution margin per unit

= 25,000/7

= 3,571 (Rounded to whole unit)