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PROBLEMS: Each are worth 30 points each: I. Cost-volume-profit analysis: Diana Company, a sole proprietorship, sells only one product. The regular price is $160 Variable
PROBLEMS: Each are worth 30 points each: I. Cost-volume-profit analysis: Diana Company, a sole proprietorship, sells only one product. The regular price is $160 Variable costs are $88 per unit, and total fixed costs are $8,400 a month. Management decides to decrease the selling price from $160 to $145 per unit. Assume that the variable cost per unit and total fixed costs are not changed by this pricing decision. (a) At the original selling price of S160 a unit, what is the contribution margin ratio? (b) At the original selling price of S160 a unit, what is the breakeven point in dollar sales for Diana Company? S (c) At the original selling price of $160 a unit, what dollar volume of sales per month is required for Diana Company to earn a monthly operating income of $6,500? (d) At the reduced selling price of $145 a unit, what is the contribution margin ratio? (e) At the reduced selling price of $145 a unit, what is the breakeven point in dollar sales for Diana Company?$
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