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Help with break even sales Blossom Profiles provides testing services to school districts that wish to assess students' reading and mathematical abilities. Last year Blossom
Help with break even sales
Blossom Profiles provides testing services to school districts that wish to assess students' reading and mathematical abilities. Last year Blossom evaluated 36,000 math tests and 12,000 reading tests. An income statement for last year follows. Math Testing Reading Testing Per Unit Per Unit $46 $30 Total $1,080,000 756,000 $324,000 Sales revenue Variable expenses Contribution margin Fixed expenses Operating income Total $552,000 276,000 $276,000 21.00 23 $23 Total Company $1,632,000 1,032,000 600.000 300.000 $300.000 $9.00 (a) Your answer is correct. What is Blossom's breakeven point in sales dollars? (Use your answer of breakeven units to calculate the breakeven point in dollars. Round Breakeven units and point in dollar to 0 decimal places, e.g. 5,275.) $ 816000 Breakeven sales Your answer is correct. In an effort to raise the demand for reading tests, managers are planning to lower the price from $46 per test to $30 per test, the current price of the math test. They believe that doing so will increase the demand for reading tests to 36,000. Prepare a contribution format income statement reflecting Blossom's new pricing and demand structure. Blossom Profiles Contribution Income Statement Math Testing Total Per Unit Total Sales $ 1080000 $ 30 $ Variable Expenses 756000 i 21 828 Contribution Margin $ 324000 $ 9 Fixed Expenses Operating Income /(Loss) In an effort to raise the demand for reading tests, managers are planning to lower the price from $46 per test to $30 per test, the current price of the math test. They believe that doing so will increase the demand for reading tests to 36,000. Prepare a contribution format income statement reflecting Blossom's new pricing and demand structure. Blossom Profiles Contribution Income Statement Reading Testing Per Unit Total Per Unit Total Company 30 $ 1080000 $ 30 $ 2160000 21 i 828000 i 23 1584000 i 9 $ 252000 $ 7 576000 300000 i $ 276000 Your answer is partially correct. What will be Blossom's breakeven point in sales dollars if this change is implemented? (Use your answer of breakeven units to calculate the breakeven point in dollars. Round Breakeven units and point in dollar to 0 decimal places, e.g. 5,275.) $ 1125000 Breakeven sales Do you recommend that Blossom make the change? Blossom should not make the change. RecommendationStep by Step Solution
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