Currently, the Unit Selling Price Is $50, the Variable Cost

question 129

Short Answer

Currently, the unit selling price is $50, the variable cost, $34, and the total fixed costs, $108,000. A proposal is being evaluated to increase the selling price to $54.
(a) Compute the current break-even sales (units).
(b) Compute the anticipated break-even sales (units), assuming that the unit selling price is increased and all costs remain constant.

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Definitions:

Income and Loss Ratio

Usually referred to as the "loss ratio" in insurance, it is a metric that compares losses (claims paid and adjustment expenses) to premiums earned.

Capital Account

The capital account in accounting represents where all transactions involving the purchase and sale of capital assets are recorded, often reflecting the net worth of a business.

Liquidating

The process of converting assets into cash, often referring to the sale of assets during the winding down or closure of a business.

Noncash Assets

Assets that are not in the form of cash or easily convertible into cash, such as real estate, equipment, and patents.