Question

Scott Incorporated has been in business for several months. Because of increased competition in the region for part​ adapters, the managers at Scott Incorporated is considering cutting sales price from $ 27 per adapter to $ 24 per adapter. New sales price per poster $ 24 Variable price per adapter $ 17 New contribution margin per adapter $ 7 If the variable expenses remain at $ 17 per adapter and the fixed expenses remain at $ 6,000​, how many adapters will the managers need to sell to break​ even? Compute the breakeven sales in units.

Answer 1

Break even units = 858 adapters.

Step-by-step explanation:

Revised selling price = $24 per adapter

Variable cost = $17 per adapter

Contribution per adapter = $24 - $17 = $7

Provided fixed cost = $6,000

Break even point in units =
`(Fixed Cost)/(Contribution per unit)`

= $6,000/$7 = 857.14

Since the unit cannot be rounded off downwards, we have

Final Answer

Break even units = 858 adapters.