Question
The postal service of St. Vincent, an island in the West Indies, obtains a significant portion of its revenues from sales of special souvenir sheets
The postal service of St. Vincent, an island in the West Indies, obtains a significant portion of its revenues from sales of special souvenir sheets to stamp collectors. The postal service purchases the souvenir sheets from a supplier for $2.50 each. St. Vincent has been selling the souvenir sheets for $14.00 each and ordinarily sells about 114,000 units. To test the market, the postal service recently priced a new souvenir sheet at $12.60 and sales increased to 129,960 units.
Required:
1. What total contribution margin did the postal service earn when it sold 114,000 sheets at a price of $14.00 each?
2. By what percentage did the St. Vincent post office decrease its selling price? By what percentage did unit sales increase?
3. What total contribution margin did the postal service earn when it sold 129,960 sheets at a price of $12.60 each?
4. What was the postal services increase (decrease) in total contribution margin going from the higher price of $14.00 to the lower price of $12.60?
5. How many sheets would the postal service have to sell at the lower price of $12.60 to equal the total contribution margin earned at the higher price of $14.00? (Round your answer to the nearest whole number.)
6. What percentage increase in the number of sheets sold at $12.60 must be achieved to equal the total contribution margin earned at the higher price of $14.00? (Round your intermediate calculations to the nearest whole number. Round final answer to 1 decimal place.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started