Fredonia Inc. had a bad year in 2013. For the first time in its history, it operated at a loss. The company
Solution
BEP= 8.02 per unit
alternative 1 is better than other alternative
.
Fredonia Inc- had a bad year in 2013- For the first time in its histor (1).docx
Fredonia Inc- had a bad year in 2013- For the first time in its histor (1).docx
1. Fredonia Inc. had a bad year in 2013. For the first time in its history, it operated at a loss. The
company
Fredonia Inc. had a bad year in 2013. For the first time in its history, it operated at a loss. The
company
Solution
BEP= 8.02 per unit
alternative 1 is better than other alternative
Alternative 1
Increase unit selling price 22% with no change in
costs and expenses
Sale price in 2013
Net Sales 1520360
/ no. of units 79600 19.10
increase 22%
19.10 +22% 23.30
Computation for break even
Sales 79600*23.30 1854680
less : variable cost 1749100
contribution 105580
Break even point =
Fixed cost/
contribution
8.019511