Question
Kumar produces large decorative tiles used in home decor. The tiles sell for $710 and the fixed monthly operating costs are as follows: Rent and
Kumar produces large decorative tiles used in home decor. The tiles sell for $710 and the fixed monthly operating costs are as follows: Rent and utilities $850 Management salaries 3,000 Other expenses 540 Kumar's accountant told him about contribution margin ratios and he understood clearly that for every dollar of sales, $0.60 went to cover his fixed costs, and that anything past that point was pure profit. Kumar's is planning to increase the selling price to $850. What impact will the increase in selling price have on the breakeven point in units? A. It will go down from 1111 to 88 units. B. It will go up from 1111 to 1414 units. C. It will go down from 1313 to 1111 units. D. It will stay the same.
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