My company sells small luxury good that is produced by the company. During 2019, the company sold 696,000 units at an average selling price of $4.20 per unit. The variable expenses were $1,900,080 and the fixed expenses were $683,256.

(1) What is the product's contribution margin ratio?

(2) What is the company's break-even point in units and in dollars for the product.

(3) What is the margin of safety, both in dollars and as a ratio?

(4) If management wanted to increase its income from this product by 10% , how many additional units would have to be sold to reach this income level.

(5) If sales increase by 48,000 units and the cost behaviors do not change,how much will net income increase on this product.

Part B

The company is thinking os special producing one of its CD. To do so would increase variable costs for all CDs by an average of $0.70 per unit. The company also estimates that this change could increase the overall number of CDs sold by 10%, and the average sales price would increase $0.20 per unit. The company currently sells 491,740 CDs at an average selling price of $26.50. The manufacturing costs are variable: $6,863,512 and fixed: $2,050,140. Selling and administrative costs are variable: $2,651,657 Variable and fixed: $794,950

(1) The company begins a special producing its CDs, how would that affect the company.

(2) Suppose the average sales price per CD unit did not increase, when the company began its special producing the CDs, what would be the effect on the company