Question
The following monthly data in contribution format are available for the MN Company and its only product, Product SD: Total Per Unit Sales $83,700 $279
The following monthly data in contribution format are available for the MN Company and its only product, Product SD: Total Per Unit Sales $83,700 $279 Variable expenses 32,700 109 Contribution margin 51,000 $170 Fixed expenses 40,000 Net operating income $11,000 The company produced and sold 300 units during the month and had no beginning or ending inventories. Required: a) What is the break even point for this product, both in units and dollars? b) Management is contemplating the use of plastic gearing rather than metal gearing in Product SD. This change would reduce variable expenses by $18 per unit. The company's sales manager predicts that this would reduce the overall quality of the product and thus would result in a decline in sales to a level of 250 units per month. Should this change be made? c) Assume that MN Company is c
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