Fairfield Company management has budgeted the following amounts for its next fiscal year: Total fixed expenses $832,500 Sale price per unit $40 Variable expenses per unit $25 What will happen to the break-even point in units if Fairfield can reduce fixed expenses by $22,500? Select one: A.The break-even point will decrease by 900 units. B.The break-even point will increase by 562 units. C.The break-even point will decrease by 1,500 units. D.The break-even point will decrease by 562 units.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
7.Fairfield Company management has budgeted the following amounts for its next fiscal year:
|
Total fixed expenses |
$832,500 |
|
Sale price per unit |
$40 |
|
Variable expenses per unit |
$25 |
What will happen to the break-even point in units if Fairfield can reduce fixed expenses by $22,500?
Select one:
A.The break-even point will decrease by 900 units.
B.The break-even point will increase by 562 units.
C.The break-even point will decrease by 1,500 units.
D.The break-even point will decrease by 562 units.
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