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

question 15

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 $119,000 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)414 units
• B)340 units
• C)476 units
• D)149,940 units

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Definitions:

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A legal term for a mental disorder of such a severe nature that a person cannot distinguish fantasy from reality, cannot conduct her/his affairs due to psychosis, or is subject to uncontrollable impulsive behavior.

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A form of self-expression that involves decorating, altering, or modifying the human body through practices such as tattooing, piercing, and body painting.

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