US CMA Part 2 · Chapter 5 · Question 8 of 15
Stanton Toys sells a toy at $40 with a variable cost of $25 and fixed costs of $300,000. If the variable cost rises to $28 per unit, by how many units will the breakeven point increase?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) 5,000 units
Explanation
Original breakeven = $300,000 / ($40 - $25) = $300,000 / $15 = 20,000 units. New breakeven = $300,000 / ($40 - $28) = $300,000 / $12 = 25,000 units. Increase = 5,000 units. The 20% fall in unit contribution margin raises breakeven by 25%, not by the 12% rise in variable cost.
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