Question
. Diana Company, a sole proprietorship, sells only one product. The regular price is $160. Variable costs are 55% of this selling price, and fixed
. Diana Company, a sole proprietorship, sells only one product. The regular price is $160. Variable costs are 55% of this selling price, and fixed costs are $8,400 a month. Management decides to decrease the selling price from $160 to $145 per unit. Assume that the cost of the product and the fixed operating expenses are not changed by this pricing decision. Required:
Answer the following questions:
- At the original selling price of $160 a unit, what is the contribution margin ratio?
- At the original selling price of $160 a unit, what dollar volume of sales per month is required for Diana
- At the original selling price of $160 a unit, how many units does company need to break even? (Round your answer to the nearest whole dollar.)
- At the original selling price of $160 a unit, what dollar volume of sales per month is required for Diana?
- Calculate the number of units which the company needs to earn a monthly operating income of $6,500? (Round your answer to the nearest whole dollar.)
- At the reduced selling price of $145 a unit, what is the contribution margin ratio?
At the reduced selling price of $145 a unit, what dollar volume of sales per month is required to break even? (Round your intermediate percentage to one decimal place and final answer to the nearest whole dollar.)
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