A firm produces and sells a widget. Information about the current price, yearly sales, and costs are
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A firm produces and sells a widget. Information about the current price, yearly sales, and costs are given in the table below:
The firm considers a price reduction from $10 to $8.90. Use this information to calculate (1) the break- even sales change both in absolute and relative terms, and (2) the reduced contribution due to the price reduction, the increased contribution due to the sales volume increase and the increase in total variable costs.
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