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Linda_us
Linda_us, Finance, Accounts & Homework Tutor
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Experience:  Post Graduate Diploma in Management (MBA)
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Resolved Question:

Selling price $24
Variable manufacturing cost 18
Fixed costs $126,000
Answer each of the following independent questions.
Given the following information:
(A) Calculate the contribution margin and contribution margin ratio
(B) Calculate the break even point in units and dollars
(C) The number of units required and sales dollars required to earn a net income of $66,000.
(D) Management believes that they can sell 15,000 units. What selling price would be necessary to earn a net income of $72,000?
(E) Management is considering a proposal to lower the variable manufacturing cost $3 per unit while increasing fixed costs by $72,000? VVhatis the point of indifference? (At what volume in units would the total costs be the same under either proposal?)
(F) Next year the variable costs will increase by $2 to $20 per unit. If management wants to maintain the same contribution margin ratio as this year what new selling price will be
necessary?
(G) At present, the company is selling 25,000 units. The sales manager believes that a 10% decrease in selling price would result in a 20% increase in sales units. Should the company lower its selling price? Why?
Submitted: 6 years ago.
Category: Homework
Expert:  Linda_us replied 6 years ago.
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