Break-even analysis via fixed costs and contribution margin Steps:

• Compute original contribution margin (CM): $15,000 / 1,875 units =$8 per unit.
• Determine original variable cost (VC): $12 -$8 = $4 per unit.
• For target BEP of 1,500 units with unchanged CM of $8, required fixed costs = 1,500 ×$8 = $12,000.
• Test each option's new BEP using formula: BEP = fixed costs / (selling price - VC).

Why C is correct:

• Reducing fixed costs to $12,000 with unchanged CM of$8 yields BEP = $12,000 /$8 = 1,500 units, matching the break-even formula exactly.

Why the others are wrong:

• A: New CM = $12.50 -$4 = $8.50; BEP =$15,000 / $8.50 ≈ 1,765 units, exceeds target.
• B: New CM = $12 -$11.50 = $0.50; BEP =$12,000 / $0.50 = 24,000 units, far exceeds target.
• D: New CM = $$10 = 15,000 / $2 = 7,500 units, exceeds target.

Final answer: C