13) During FY 2016, Bravo Company plans to sell Widgets for $5.00 a unit. Curren

Question

13) During FY 2016, Bravo Company plans to sell Widgets for $5.00 a unit. Current variable costs are $3.00 a unit and fixed costs are expected to increase to a total of $100,000. Use this information to determine for FY 2016: 1. the number of units of Widgets for Bravo to breakeven 2. the total dollar value of sales that Bravo must achieve to breakeven (Round any total dollar value to the nearest whole dollar & enter as whole dollars only. Round any unit dollar value to the nearest penny & enter with both dollar(s) & cents. Round any unit non-dollar decimal numbers to the next higher whole number and enter as a whole number.)

Explanation / Answer

Contribution margin=Sales-variable expenses

=(5-3)=$2/unit

Hence breakeven units=Fixed costs/Contribution margin

=(100,000/2)=50000 units

=(50000*5)=$250,000

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