Management at the Forrest Company Currently Sells Its Products for $225

question 141

Multiple Choice

Management at the Forrest Company currently sells its products for $225 per unit and is contemplating a 40% increase in the selling price for the next year.Variable costs are currently 25% of sales revenue and are not expected to change in dollar amount on a per unit basis next year (the company will still pay the same variable cost per unit) .Fixed expenses are $120,750 per year.
If fixed costs were to decrease 10% during the current year and the new selling price goes into effect,how many units will need to be sold to breakeven?

• A)420 units
• B)358 units
• C)908 units
• D)132,825 units

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