Answered

Westonci.ca is the Q&A platform that connects you with experts who provide accurate and detailed answers. Discover solutions to your questions from experienced professionals across multiple fields on our comprehensive Q&A platform. Connect with a community of professionals ready to provide precise solutions to your questions quickly and accurately.

Forrester Company is considering buying new equipment that would increase monthly fixed costs from $126,000 to $162,000 and would decrease the current variable costs of $70 by $10 per unit. The selling price of $100 is not expected to change. Forrester's current break-even sales are $420,000 and current break-even units are 4,200. If Forrester purchases this new equipment, the revised break-even point in units would:

Sagot :

Answer:

150 units decrease

Explanation:

The computation of the revised break even point in units is shown below:

As we know that

Break even point in units is

= Fixed costs ÷ (Selling price - variable cost)

= $162,000 ÷  ($100 - $60)

= 4,050

And, the Current Break even point is 4,200

So, BEP will reduce by

= 4,200 - 4,050

= 150 units

We appreciate your time on our site. Don't hesitate to return whenever you have more questions or need further clarification. We appreciate your visit. Our platform is always here to offer accurate and reliable answers. Return anytime. Westonci.ca is committed to providing accurate answers. Come back soon for more trustworthy information.