A manufacturer of major appliances provides the following information about the operations of the refrigeration division: Fixed
Question:
Fixed costs per period are $26 880; variable costs per unit are $360; selling price per unit is $640; and capacity is 150 units.
(a) Compute
(i) The contribution margin;
(ii) The contribution rate.
(b) Compute the break-even point
(i) In units;
(ii) As a percent of capacity;
(iii) In sales dollars.
(c) Determine the break-even point in sales dollars if fixed costs are increased to $32 200.
(d) Determine the break-even point as a percent of capacity if fixed costs are reduced to $23 808, while variable costs are increased to 60% of sales.
Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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Related Book For
Contemporary Business Mathematics with Canadian Applications
ISBN: 978-0133052312
10th edition
Authors: S. A. Hummelbrunner, Kelly Halliday, K. Suzanne Coombs
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