The budget for a product is shown.
unit sales 620 000
$
selling price per unit 31
variable cost per unit 16
contribution per unit 15
fixed costs $7 500 000
If the fixed costs rise to $7 800 000, the selling price is reduced to $29 per unit, and the variable cost remains unchanged at $16 per unit, the sales are likely to reach 660 000 units.
By what percentage will the break-even point increase?

Q: What topic does this question test?

This question tests Decision Making (Break-even Analysis) in A-Level Accounting (syllabus code 9706). It is worth 1 mark.

Q: Which exam paper is this question from?

This question appeared in the Cambridge A-Level Accounting Oct/Nov 2012 examination, Paper 1 Variant 2 (9706_w12_qp_12.pdf).

Question

The budget for a product is shown.
unit sales 620 000 
$ 
selling price per unit 31 
variable cost per unit 16 
contribution per unit 15 
fixed costs $7 500 000 
If the fixed costs rise to $7 800 000, the selling price is reduced to $29 per unit, and the variable cost remains unchanged at $16 per unit, the sales are likely to reach 660 000 units.
By what percentage will the break-even point increase?

Oracle Prep · Accepted Answer

The correct answer is D: 20.0%.

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