Purpose Inc. is considering selling a new product on the market. The selling price is 1,150 USD per unit, and the variable manufacturing costs are estimated at 510 USD. The variable selling cost is 15% of sales dollars. The annual fixed manufacturing costs are 3,200,000.

REQUIRED:

A. What is Purpose Inc.s contribution margin per unit?

B. What is the contribution margin ratio?

C. What is the break-even point in units?

D. Financial officers are concerned that the variable manufacturing costs are too high. Upon inquiry, they found that there can be a modification in the design, and it will bring the variable cost down by 100 USD per unit.

Will this change cause the break-even point to increase or decrease from the initial point? Justify your answer.