A Ltd has sales of 2,200, total fixed costs of 570, variable costs of 1,540 (including raw materials of 1,100) and sells 22,000 units. What is the break-even point in units if the raw material price falls by 2%?
Correct answer D. 18,387
Explanation
Raw materials fall by 22, so variable cost becomes 1,518 and contribution 682, or 0.031 per unit. Break-even units are 570 / 0.031 = 18,387.
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