The Manager at the Yarn Factory Changed the Price of Spools

question 153

Multiple Choice

The manager at the Yarn Factory changed the price of spools to increase sales. The current price per unit is $13.85 per box of 500 spools; and, the forecasted lower price per unit to increase sales is $11.55 per box of 500 spools. If the variable expenses remain at $8.79 and the fixed expenses remain $3000 how many units must be sold at the new price to breakeven? Compute the contribution margin per unit using the old sales price. Next, compute the contribution margin per unit using the new sales price. Use the new unit contribution margin to compute breakeven sales in units. What is the breakeven sales in units?

• A)1087 units
• B)217 units
• C)260 units
• D)341 units

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Definitions:

Shading Coil Diameter

The diameter of a shading coil, which is used in electromagnetic devices to reduce noise or humming by creating a delayed magnetic field.

Magnetic Field

An area surrounding a magnetic substance or a moving charged particle where magnetic forces are exerted.

Rotor Construction

The design and assembly of the rotating component within an electric motor or generator.

Generator Power

The amount of electrical power, usually measured in watts (W) or kilowatts (kW), that a generator can produce.