APPLY THE CONCEPTS: Effect of Changes to Sales Price, Variable Costs and Fixed Costs

Now consider each of the following scenarios for Brooks Products. Calculate the contribution margin (CM) per unit, rounded to nearest dollar, and the new break-even point in units, rounded to the nearest whole unit, for each scenario separately.

Scenario 1 Brooks has been experiencing quality problems with a materials supplier. Changing suppliers will improve the quality of the product but will cause direct materials costs to increase by $1 per unit. CM per unit: $______ Break-even units: ______ units

Scenario 2 Brooks will dispose of a machine in the factory. The depreciation on that equipment is $500 per month. $CM per unit: $_____ Break-even units:_____units

Scenario 3 After some extensive market research, Brooks has determined that a sales price increase of $2 per unit will not affect the sales volume and will be effective immediately. CM per unit: $_____ Break-even units:____

it Portal | Ashford Univers X Week 2 - CNOW Assignment x "CengageNOWv2 | Or eAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprog Calculator Profit Line -2500 5000 7500 -10000 200 400 400 800 1000 C. UNITS OF SALES Clear All Help PROFIT DOLETS 10000 iOper Profit Area 7500 5008 2500 2500 7500 Fleer all Helpal | Ashford Univers X Week 2 - CNOW Assignment ignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress= Calculator PROFIT ( Dollars) 10000 Oper. Profit Area 7500 5000 Oper. Loss Area 2500 Profit Line 2500 5000 7500 10400 #200 609 003 IN S OF SALES Clear All Help PROFIT DOLOTS 2560 Check My WholeCalculator APPLY THE CONCEPTS: The Profit-Volume Graph A profit-volume graph helps managers to visualize the relationship between prof construct the profit-volume graph below. The purple points (diamond symbols) the red points (cross symbols). The operating profit is the area bounded by the Choose the correct profit-volume graph for Brooks Products A V PROFIT (Dollars) 10000 Oper. Profit Area 7500 5000 Oper. Loss Area 2500 Profit Line 2500 5000 7500 -10000 200 400 600 809 A. UNITS OF SALES Clear All Help