Cottonwood Company reports the following operating results for the month of April.

Management is considering the following course of action to increase operating income: Reduce the selling price by 10%, with no changes to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 30%.
Instructions
Using the contribution margin technique, calculate the break-even point in units and dollars and margin of safety in dollars,
(a) Assuming no changes to selling price or costs,
(b) Assuming changes to sales price and volume as described above.
Comment on your findings.

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COTTONWOOD COMPANY CVP Income Statement For the Month Ended April 30, 2016 Sales (9,000 units) Variable costs Contribution margin Fixed expenses Operating income Total $450,000 247,500 202,500 150,000 $ 52,500 Per Unit $50.00 27.50 $22.50