Brown company produces flash drives for computers which it

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Brown Company produces flash drives for computers, which it sells for $20 each. Each flash drive costs $6 of variable costs to make. During March, 1,000 drives were sold. Fixed costs for March were $4.20 per unit for a total of $4,200 for the month. If variable costs decrease by 5%, what happens to the break-even level of units per month for Brown Company?

A) It is 5% higher than the original break-even point.
B) It decreases about 6 units.
C) It decreases about 15 units.
D) It depends on the number of units the company expects to produce and sell.

Isakson Company has a contribution margin per unit of $30 and a contribution margin ratio of 60%. How much is the selling price of each unit?
A) $50
B) $75
C) $18
D) Cannot be determined without more information.

Kohler Corporation sells its product for $40. The variable costs are $18 per unit. Fixed costs are $16,000. The company is considering the purchase of an automated machine that will result in a $2 reduction in unit variable costs and an increase of $5,000 in fixed costs. Which of the following is true about the break-even point in units?

A) It will remain unchanged.
B) It will decrease.
C) It will increase.
D) It cannot be determined from the information provided.

Reference no: EM13597949

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