In 2006 Karly Company had a break-even point of $800,000 based on a selling price of $10 per unit and fixed costs of $320,000. In 2007 the selling price and variable costs per unit did not change, but the break-even point increased to $920,000.

Instructions

a.Calculate the variable cost per unit for 2006.(2 points)

b.Calculate the contribution margin ratio for 2006. (1 point)

c. Calculate the amount of total fixed costs for 2007 (2 points)