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 $1.80 each. St. Vincent has been selling the souvenir sheets for $14.00 each and ordinarily sells about 100,000 units. To test the market, the postal service recently priced a new souvenir sheet at $12.60 and sales increased to 114,000 units.
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?
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