Question
Data concerning Sumter Corporation's single product appear below: Per Unit Percent of Sales Selling price $220 100% Variable expenses 66 30% Contribution margin $154 70%
Data concerning Sumter Corporation's single product appear below:
|
| Per Unit | Percent of Sales |
| Selling price | $220 | 100% |
| Variable expenses | 66 | 30% |
| Contribution margin | $154 | 70% |
Fixed expenses are $1,024,000 per month. The company is currently selling 8,000 units per month. Required: a. Compute the break even amount in units.
b. Management is considering using a new component that would increase the unit variable cost by $6. Since the new component would improve the company's product, the marketing manager predicts that monthly sales would increase by 300 units. What should be the overall effect on the company's monthly net operating income of this change if fixed expenses are unaffected?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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