Question
Company is experiencing erratic sales of its product - a special battery.This month it generated a loss of $36,000. Company sold 16,000 units for the
Company is experiencing erratic sales of its product - a special battery.This month it generated a loss of $36,000. Company sold 16,000 units for the month and has the following account balances for the income statement:
Sales (16,000 units)$480,000
Variable expenses$336,000
Fixed expenses$180,000
a.Compute the contribution margin ratio and the contribution margin per unit.
b.Compute the break-even point in Sales revenue ($).
c.How many units need to be sold for the company to earn income before tax of $90,000?
d.Assume for this question only that the company president believes a 10% decrease in the sales price and a $10,000 increase in the advertising costs will double the volume of sales from the 16,000 in the current month.If this is correct, what will Tyler report as the new net income or loss?
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