Evans Tiles Company has estimated the following amounts for its next fiscal year
Total fixed costs $832,000
Sales price per unit 44
Variable costs per unit 20
What will happen to the breakeven point (in units) if Evans can reduce fixed costs by $22,000? (Round your answer up to the nearest whole unit.)
A) The breakeven point will decrease by 917 units.
B) The breakeven point will decrease by 1,100 units.
C) The breakeven point will increase by 1,100 units.
D) The breakeven point will increase by 500 units.
A .A) Contribution margin (before reduction in fixed expenses) = $44 - $20 = $24
Decrease breakeven point due to reduction in fixed costs = $22,000 / $24 = 917 units
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