Question
Victoria Company reports the following operating results for the month of April. VICTORIA COMPANY CVP Income Statement For the Month Ended April 30, 2020 Total
Victoria Company reports the following operating results for the month of April.
VICTORIA COMPANY CVP Income Statement For the Month Ended April 30, 2020 | ||||
Total | Per Unit | |||
Sales (9,000 units) | $450,000 | $50 | ||
Variable costs | 225,000 | 25.00 | ||
Contribution margin | 225,000 | $25.00 | ||
Fixed expenses | 174,900 | |||
Net income | $50,100 |
Management is considering the following course of action to increase net income: Reduce the selling price by 6%, with no changes to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 20%. Using the contribution margin technique, compute the break-even point in units and dollars and margin of safety in dollars: (Round intermediate calculations to 4 decimal places e.g. 0.2522 and final answer to 0 decimal places, e.g. 2,510.) (a) Assuming no changes to selling price or costs.
Break-even point | 6996 | units | |
Break-even point | $ 349800 | ||
Margin of safety | $ 100200 |
(b1) Assuming changes to sales price and volume as described above.
Break-even point | units | ||
Break-even point | $ | ||
Margin of safety | $ |
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