Franklin Producers sells its core product for $9 per unit and has variable costs of $7 per unit. Total fixed costs are $26,000. Suppose variable costs increase by 20% due to an increase in the cost of direct materials. What will be the effect on the breakeven point in units? O A. Decrease from 1,625 units to 1,495 units O B. Decrease from 3,714.2857 units to 3,096 units O C. Increase from 13,000 units to 43,334 units O D. Decrease from 13,000 units to 2,364 units

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Franklin Producers sells its core product for $9 per unit and has variable costs of $7 per unit. Total fixed costs are $26,000. Suppose variable costs increase by 20% due to an increase in the cost of direct materials. What will be the effect on the breakeven point in units?
O A.
Decrease from 1,625 units to 1,495 units
O B.
Decrease from 3,714.2857 units to 3,096 units
O C. Increase from 13,000 units to 43,334 units
O D.
Decrease from 13,000 units to 2,364 units
Transcribed Image Text:Franklin Producers sells its core product for $9 per unit and has variable costs of $7 per unit. Total fixed costs are $26,000. Suppose variable costs increase by 20% due to an increase in the cost of direct materials. What will be the effect on the breakeven point in units? O A. Decrease from 1,625 units to 1,495 units O B. Decrease from 3,714.2857 units to 3,096 units O C. Increase from 13,000 units to 43,334 units O D. Decrease from 13,000 units to 2,364 units
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