A product sells for $30 per unit and has variable costs of $18 per unit. The fixed costs are $720,000. If the variable costs per unit were to decrease to $15 per unit and fixed costs increase to $900,000, and the selling price does not change, break-even point in units would: a. current breakeven b. new breakeven Show all work to receive full credit

Break-even point in units would not change.

Explanation:

Given:

Selling price = $30 per unit.

Variable cost = $18 per unit.

Fixed cost = $720,000.

New variable cost = $15.

New fixed cost = $900,000.

And, the selling price remains same, it doesn't change.

Now, to find the break-even point in units would be.

Now, to find the Current break-even point by using formula:

So, we find the new breakeven point by putting formula:

Now, we see that both the breakeven points current and new are having same units that is 60,000 units. So, break-even point would not change.

Therefore, break-even point in units would not change.

in 2001, dell computer became the world’s largest personal computer vendor, continuing to

gain market share and post profits in an industry struggling with slumping sales and billions of

dollars in losses. dell sells 90% of its pcs directly to the final customer, largely bypassing the

reseller channel that accounts for most of the world’s pc sales. this direct customer relationship

is the key to dell’s business model, and provides distinct advantages over the indirect sales

model. dell’s direct relationship with the customer allows it to tailor its offerings to customer

needs, offer add-on products and services, and use the internet to offer a variety of customer

services. in addition, dell’s pcs are built to customers’ specifications upon receipt of an order,

giving dell additional advantages over indirect pc vendors who must try to forecast demand and

ship products based on those forecasts. dell’s direct sales and build-to-order model has achieved

superior performance in the pc industry in terms of inventory turnover, reduced overhead, cash

conversion, and return on investment (kraemer, et al., 2000).

explanation:

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