Keene, inc. produces flash drives for computers, which it sells for $20 each. each flash drive costs $6 of variable costs to make. during march, 1,000 drives were sold. fixed costs for march were $5.60 per unit for a total of $5,600 for the month. if variable costs decrease by 10%, what happens to the break-even level of units per month for keene?
a) it decreases about 40 units.
b) it is 10% higher than the original break-even point.
c) it depends on the number of units the company expects to produce and sell.
d) it decreases about 16 units.

D) It decreases about 16 units.

Explanation:

Currently Keene's break even point in units = total fixed costs / contribution margin

total fixed costs = $5,600

contribution margin = selling price - contribution margin = $20 - $6 = $14

Keene's current break even point = $5,600 / $14 = 400 units

If Keene's variable costs decrease by 10%, the new contribution margin will be = $20 - $5.40 = $14.60

Keene's new break even point = $5,600 / $14.60 = 383.56 ≈ 384 units

this represents a 4% decrease (16 units less)

the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

now clearing the formula to solve for capital we got:

and we reach the answer investment = $14,174.20

i would say their habit of breaking down.