Answers
The break-even point (in unit) = Fixed expense / Contribution margin p.u.
= $411,600 / $22.40 P.u.
= 18,375 units
Where,
Contribution margin p.u. = Selling price p.u. - Variable cost p.u.
= $56 -$33.60
= $22.40
Vraible cost p.u. = (Sales * 70%) - reduction in variable cost
= ($56 * 70%) - $5.60
= $39.20 - $5.60
= $33.60
Note: if contribution margin is 30% of sales than variable cost is 70% of sales.
Break-even point (in dollar) = Fixed expense / contribution margin ratio
= $411,600 / 40%
= $1,029,000
New contribution margin ratio = Contribution margin p.u. / Net sales * 100
= $22.40 / $56 * 100
= 40%
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