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Presented is the 2014 contribution income statement of Colgate Products. Sales (13,000 units) $1, 560,000 Less variable costs Cost of goods sold $520,000 Selling and
Presented is the 2014 contribution income statement of Colgate Products. Sales (13,000 units) $1, 560,000 Less variable costs Cost of goods sold $520,000 Selling and administrative 143,000 (663,000) Contribution margin 897,000 Less fixed costs Manufacturing overhead 520,000 Selling and administrative 210.000 (730,000) Net income $167,000 During the coming year, Colgate expects an increase in variable manufacturing costs of $8 per unit and in fixed manufacturing costs of $35,000. Required If sales for 2015 remain at 13,000 units, what price should Colgate charge to obtain the same profit as last year? Management believes that sales can be increased to 16,000 units if the selling price is lowered to $107. Is this action desirable? After considering the expected increases in costs, what volume is needed to earn a profit of $167,000 with a unit selling price of $107
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