Jarvis Foods Produces a Gourmet Condiment Which Sells for $10

question 117

Multiple Choice

Jarvis Foods produces a gourmet condiment which sells for $10.00 per unit. Variable costs are $7.50 per unit, and fixed costs are $18,000 per month. Jarvis is currently selling 8,000 units per month. If Jarvis is forced to reduce the selling price down to $9.00 per unit, and volume remains constant, how will that affect its breakeven point in dollars?

• A) Breakeven will go down by $36,000 of sales revenues.
• B) Breakeven will go down by $4,800 of sales revenues.
• C) Breakeven will go up by $36.000 of sales revenues.
• D) Breakeven will go up by $8,000 of sales revenues.

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