The Branson Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.5 percent per period. Price per unit Cost per unit Unit sales per month Current Policy New Policy $61 $33 ? Break-even quantity $59 $33 2,450 What is the break-even quantity for the new credit policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
The Branson Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.5 percent per period. Price per unit Cost per unit Unit sales per month Current Policy New Policy $61 $33 ? Break-even quantity $59 $33 2,450 What is the break-even quantity for the new credit policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![The Branson Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.5 percent per period.
**Table:**
| | Current Policy | New Policy |
|-------------------|----------------|------------|
| Price per unit | $59 | $61 |
| Cost per unit | $33 | $33 |
| Unit sales per month | 2,450 | ? |
**Question:**
What is the break-even quantity for the new credit policy? **(Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)**
*Input Field:*
- Break-even quantity: [________]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff00761e5-6ea2-4b64-9c87-d0591240e351%2F7f2e2865-e96b-4c3b-8248-641051d788e3%2F5i1643n_processed.png&w=3840&q=75)
Transcribed Image Text:The Branson Corporation is considering a change in its cash-only policy. The new terms would be net one period. The required return is 2.5 percent per period.
**Table:**
| | Current Policy | New Policy |
|-------------------|----------------|------------|
| Price per unit | $59 | $61 |
| Cost per unit | $33 | $33 |
| Unit sales per month | 2,450 | ? |
**Question:**
What is the break-even quantity for the new credit policy? **(Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)**
*Input Field:*
- Break-even quantity: [________]
Expert Solution
Step 1: Define=break even quantity
Credit Cost = Price per unit as per new policy x Required Return
In the given case, the break even quantity will be such quantity where after including the credit cost how much they have to sell the units to achieve the same contribution policy as per current policy
Contribution Margin = Sales - Variable cost
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