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In: Accounting

Question. Currently the unit selling price of a product is $200, the unit variable cost is...

Question.

Currently the unit selling price of a product is $200, the unit variable cost is $110, and the total fixed costs are $585,000. A proposal is being evaluated to increase the unit selling price to $275. Under the proposed plan, the variable cost per unit and the total fixed cost will not change.

Current Scenario [7 Points]:

1) Calculate the contribution margin per unit.

2) Calculate the contribution margin ratio.

3) Calculate the breakeven point in units under the current scenario.

4) Calculate the breakeven point in dollars under the current scenario,

5) Calculate the number of units to be sold if the company desires a target profit of $225,000.

6) Calculate the sales dollars if the company desires a target profit of $225,000.

Proposed Plan [7 Points]:

1) Calculate the contribution margin per unit.

2) Calculate the contribution margin ratio.

3) Calculate the breakeven point in units under the current scenario.

4) Calculate the breakeven point in dollars under the current scenario,

5) Calculate the number of units to be sold if the company desires a target profit of $225,000.

6) Calculate the sales dollars if the company desires a target profit of $225,000.

Answer:

Expert Solution

ekkarill92 answered 2 years ago

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