For the current year ending January 31, Harp Company expects fixed costs of $177,000 and a...

For the current year ending January 31, Harp Company expects fixed costs of $177,000 and a unit variable cost of $52.00. For the coming year, a new wage contract will increase the unit variable cost to $57.00. The selling price of $60.00 per unit is expected to remain the same. If required, round your answer to the nearest whole unit.

Required:

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.-

Solutions

Expert Solution

Conclusion

Break-even point in unit (Current year) = 22,125 units

Anticipated Break-even point in unitsfor the coming year if new wage rate is signed= 59,000 units

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