Gigondas Incorporated had the following information:Avtivity DriverUnit Variable CostLevel of Activity DriverUnits Sold$20--Setups1,00040Engineering Hours601,000 Other Data: Total Fixed Cost (Conventional)$100,000 Total Fixed Cost (ABC)$50,000 Unit Selling Price$40 Suppose Gigondas could reduce setup costs by $300 per setup and could reduce the number of engineering hours needed to 900. How many units must be sold to break even in this case?

Contribution per unit = Sale price - Variable cost = 40 - 20 = $20

Answered: Gigondas Incorporated had the following…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

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Gigondas Incorporated had the following information:

Avtivity Driver	Unit Variable Cost	Level of Activity Driver
Units Sold	$20	--
Setups	1,000	40
Engineering Hours	60	1,000

Other Data:
Total Fixed Cost (Conventional)	$100,000
Total Fixed Cost (ABC)	$50,000
Unit Selling Price	$40

Suppose Gigondas could reduce setup costs by $300 per setup and could reduce the number of engineering hours needed to 900. How many units must be sold to break even in this case?

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