Bolger and Co

Multiple Choice

Bolger and Co. manufactures large gaskets for the turbine industry. Bolger's per-unit sales price and variable costs for the current year are as follows.
Sales price per unit $300
Variable costs per unit 210
Bolger's total fixed costs aggregate $360,000. As Bolger's labor agreement is expiring at the end of the year, management is concerned about the effect a new agreement will have on its unit breakeven point. The controller performed a sensitivity analysis to ascertain the estimated effect of a $10 per unit direct labor increase and a $10,000 reduction in fixed costs. Based on this data, it was determined that the breakeven point would:

A) Decrease by 1,000 units.
B) Decrease by 125 units.
C) Increase by 375 units.
D) Increase by 500 units.