Mosaic tile company has estimated the following amounts for its next fiscal year: total fixed costs $832,000 sales price per unit 44 variable costs per unit 20 what will happen to the breakeven point (in units) if mosaic can reduce fixed costs by $22,000? (round your answer up to the nearest whole unit.) a. the breakeven point will decrease by 1,100 units. b. the breakeven point will decrease by 917 units. c. the breakeven point will increase by 1,100 units. d. the breakeven point will increase by 500 units.

B. The break even point will decrease by 917 units

Explanation:

The formula to compute the break even point in units is shown below:

Break even point (in units) = Fixed cost ÷ (Selling price per unit -= variable cost per unit)

Or we can use,

Break even point (in units) = Fixed cost ÷ Contribution per unit

As the contribution per unit = Selling price per unit - variable cost per unit

So, the Break even point equals to

= $832,000 ÷ ($44 per unit - $20 per unit)

= $832,000 ÷ $24 per unit

= 34,667 units

And, if the fixed cost is reduced by $22,000

So, the new fixed cost = $832,000 - $22,000 = $810,000

Now the new break even point equals to

= $810,000 ÷ ($44 per unit - $20 per unit)

= $810,000 ÷ $24 per unit

= 33,750 units

Hence, The break even point will decreased by 917 units ($34,667 units - 33,750 units)