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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

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