Accounting 9706 · AS & A Level · Costs and cost behaviour

Costs and cost behaviour — practice question

A company is given the following budgeted figures for May: selling price per unit $\$120$; variable costs per unit $\$80$; total fixed costs $\$56\,000$. The company plans to purchase a new machine that will cut variable costs by $20\%$ and raise fixed costs by $20\%$. What is the change in break-even sales volume?

  • Adecrease by $200$ units
  • Bincrease by $200$ units
  • Cdecrease by $700$ units
  • Dincrease by $700$ units

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