Solution-What is the change in the breakeven volume

What is the change in the breakeven volume

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Question - Omega Corporation uses breakeven analysis to study the effects of expansion projects it considers. Currently, the firm's plastic bag business segment has fixed costs of P120,000, while its unit price per carton is P1.20 and its variable unit cost is P0.60. The firm is considering a new bag machine and an automatic carton folder as modifications to its existing production lines. With the expansion, fixed costs would rise to P240,000, but variable cost would drop to P0.41 per unit. One key benefit is that Omega can lower its wholesale price to its distributors to P1.05 per carton (that is, its selling price), and this would likely more than double its market share, as it will become the lowest cost producer. What is the change in the breakeven volume with the proposed project?

a. 100,000 units

b. 0 units

c. 75,000 units

d. 175,000 units

e. 200,000 units

Reference no: EM132886199

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What is the change in the breakeven volume

Reference no: EM132886199

Reference no: EM132886199

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