Sweet Sue, Inc , produces a particularly rich praline fudge Each 10 ounce box sells for $5 50 Variable unit costs are as follows Fixed overhead cost is $24,000 per year Fixed selling and administrative costs are $9,000 per year Sweet Sue sold 35,000 boxes last year Required 1 What is the contributi...

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Sweet Sue, Inc., produces a particularly rich praline fudge. Each 10-ounce box sells for $5.50. Variable unit

Question:

Sweet Sue, Inc., produces a particularly rich praline fudge. Each 10-ounce box sells for $5.50.

Variable unit costs are as follows:

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Fixed overhead cost is $24,000 per year. Fixed selling and administrative costs are $9,000 per year. Sweet Sue sold 35,000 boxes last year.
Required:
1. What is the contribution margin per unit for a box of praline fudge? What is the con¬
tribution margin ratio?
2. How many boxes must be sold to break even? What is the break-even sales revenue?
3. What was Sweet Sue's operating income last year?
4. What was the margin of safety?
5. Suppose that Sweet Sue, Inc., raises the price to $6.00 per box, but anticipated sales will drop to 31,500 boxes. What will the new break-even point in units be? Should Sweet Sue raise the price? Explain.