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

question 77

Essay

Currently, the unit selling price is $50, the variable cost is $34, and the total fixed costs are $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.


Definitions:

Market Price Approach

The market price approach is a method used to value assets based on the current market price of similar or identical assets.

Transfer Price

The price at which goods and services are transferred between departments or subsidiaries of the same company.

Cost Price Approach

A pricing methodology where the selling price of a product is determined by adding a markup to its total cost of production or acquisition.

Return on Investment

A financial metric used to evaluate the efficiency or profitability of an investment, calculated by dividing the benefit (return) of an investment by the cost of the investment.

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