Question - Keene, Inc. produces flash drives for computers, which it sells for $20 each. Each flash drive costs $6 of variable costs to make. During March, 1,000 drives were sold. Fixed costs for March were $5.60 per unit for a total of $5,600 for the month. If variable costs decrease by 10%, what happens to the break-even level of units per month for Keene?
It decreases about 16 units.
It depends on the number of units the company expects to produce and sell.
It decreases about 40 units.
It is 10% higher than the original break-even point.