Management at the Trapper Company Currently Sells Its Products for $200

question 127

Multiple Choice

Management at the Trapper Company currently sells its products for $200 per unit and is contemplating a 50% 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 $120,000 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 break even?

• A) 377 units
• B) 880 units
• C) 432 units
• D) 132,000 units

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