Answer (B) is correct . The breakeven point in units equals total fixed costs divided by the unit contribution margin. Fixed cost for the previous year was $105,000 (20,000 units at breakeven × $5.25 UCM). Fixed cost for the current year is $115,500 ($105,000 × 1.1). The new UCM is $6 ($9 selling price – $3 unit variable cost). Accordingly, the BEP is 19,250 units ($115,500 ÷ $6).
Answer (A) is incorrect because This amount is based on the preceding year’s fixed costs.
Answer (C) is incorrect because The preceding year’s BEP is 20,000.
Answer (D) is incorrect because This amount is the breakeven point if the current year’s fixed costs of $115,500 ($105,000 × 1.1) is divided by last year’s contribution margin of $5.25.
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The number of T-shirts Donnelly Corporation must sell to break even in the coming year is
