Question
Cullumber Manufacturing Ltd. has provided you with the following CVP income statement: Sales (5,100 units) $1,020,000 $200 per unit Variable costs 673,200 132 per unit
Cullumber Manufacturing Ltd. has provided you with the following CVP income statement:
Sales (5,100 units) | $1,020,000 | $200 | per unit | |||
Variable costs | 673,200 | 132 | per unit | |||
Contribution margin | 346,800 | $68 | per unit | |||
Fixed costs | 285,600 | |||||
Operating income | $61,200 |
Management is considering the following course of action to increase operating income: reduce the selling price by 20%, with no changes to unit variable costs or fixed costs. Management feels that this change will increase unit sales by 30%.
Calculate the break-even point in units and sales dollars with no change in sales. (Round contribution margin ratio to 5 decimal places, e.g. 15.22456%. Round units to 0 decimal places, e.g. 5,275 and dollar amount to 2 decimal places, e.g. 15.25.)
In units | In dollars | |||
---|---|---|---|---|
Break-even point | enter a number of units rounded to 0 decimal places | $enter a dollar amount rounded to 2 decimal places |
Question Part Score
--/2
Calculate the break-even point in units and sales dollars with the proposed change in sales price. (Round units to 0 decimal places, e.g. 5,275 and dollar amount to 2 decimal places, e.g. 15.25.)
In units | In dollars | |||
---|---|---|---|---|
Break-even point | enter a number of units rounded to 0 decimal places | $enter a dollar amount rounded to 2 decimal places |
Question Part Score
--/4
Should management go forward with the reduction in sales price? select an option YesNo
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started