gabrielle and her business partners are starting a new business that sells organic shampoo. after analyzing…

gabrielle and her business partners are starting a new business that sells organic shampoo. after analyzing the market they have a projected sales forecast showing that they must sell 50,000 bottles of shampoo in 12 months to break - even. calculating the variable unit cost and projected unit price gives a break - even volume of 45,000 bottles. why should the projected unit price be changed based on the break - even volume?\na. the break - even volume is too close to the forecasted unit sales.\nb. the break - even volume is much greater than the forecasted unit sales.\nc. the break - even volume is drastically lower than the forecasted unit sales.\nd. the break - even volume is not related to the forecasted unit sales.

gabrielle and her business partners are starting a new business that sells organic shampoo. after analyzing the market they have a projected sales forecast showing that they must sell 50,000 bottles of shampoo in 12 months to break - even. calculating the variable unit cost and projected unit price gives a break - even volume of 45,000 bottles. why should the projected unit price be changed based on the break - even volume?\na. the break - even volume is too close to the forecasted unit sales.\nb. the break - even volume is much greater than the forecasted unit sales.\nc. the break - even volume is drastically lower than the forecasted unit sales.\nd. the break - even volume is not related to the forecasted unit sales.

Answer

Brief Explanations:

The break - even volume is 45,000 bottles and the forecasted sales are 50,000 bottles. A close break - even volume to forecasted sales means a small margin of safety. To increase the margin of safety and reduce the risk of not making a profit, the projected unit price may need to be adjusted.

Answer:

a. The break - even volume is too close to the forecasted unit sales.