Keene Inc Produces Flash Drives for Computers Which It Sells for for $20

question 86

Multiple Choice

Keene Inc. produces flash drives for computers which it sells for $20 each. Each flash drive costs $6 of variable costs to make. During March 1000 drives were sold. Fixed costs for March were $5.60 per unit for a total of $5600 for the month. If variable costs decrease by 10% what happens to the break-even level of units per month for Keene?

• A) It is 10% higher than the original break-even point.
• B) It decreases about 16 units.
• C) It decreases about 40 units.
• D) It depends on the number of units the company expects to produce and sell.

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Definitions:

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