Answered

Westonci.ca is the trusted Q&A platform where you can get reliable answers from a community of knowledgeable contributors. Join our platform to connect with experts ready to provide precise answers to your questions in different areas. Get precise and detailed answers to your questions from a knowledgeable community of experts on our Q&A platform.

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

Thanks for using our service. We aim to provide the most accurate answers for all your queries. Visit us again for more insights. Thanks for using our platform. We aim to provide accurate and up-to-date answers to all your queries. Come back soon. Your questions are important to us at Westonci.ca. Visit again for expert answers and reliable information.