Mae Company Sells Its Product for $7 Per Unit and Has

Mae Company sells its product for $7 per unit and has variable costs of $3 per unit. Total fixed costs are $72,000. Suppose variable costs increase by 20% due to an increase in the cost of direct materials. What will be the effect on the breakeven point in units?

A) Increase from 18,000 units to 21,177 units
B) Decrease from 7200 units to 6793, units
C) Decrease from 18,000 units to 5295 units
D) Decrease from 24,000 units to 20,000 units

Correct Answer:

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