The following information pertains to MacKenzie Corp. Sales of 22,500 units for $900,000, Fixed Expenses are $350,000 and theBreak-even Point is $700,000. If sales price were to decrease by 5% and variable expenses were to increase by $2.00 per unit, whichof the following is true?○ The new selling price is $36 per unit○ The new break-even point is $831,250○ The new variable expenses are $18 per unit○ The new break-even point is 21,750 unitsO none of the above

The objective of the question is to determine the new selling price, the new break-even point, the…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Lindon Company is the exclusive distributor for an automotive product. The product sells $40 per unit and has a CM ratio of 30%. The company's fixed expenses are $180,000 per year. Required: 1. What are the variable expenses per unit? 2. Using the equation method: a. What is the break-even point in units and sales dollars? b. What sales level in units and in sales dollars is required to earn an annual profit of $60,000? c. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $4 per unit. What is the Company's new break-even point in units and in sales dollars? 3. Repeat (2) above using the unit contribution method.

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