The lighting division of Universal Electric Company plans to introduce a new street light based on the following accounting information: Fixed costs per period are $3136; variable cost per unit is $157; selling price per unit is $185; and capacity per period is 320 units.
(a) Compute
(i) The contribution margin;
(ii) The contribution rate.
(b) Compute the break-even point
(i) In units;
(ii) As a percent of capacity;
(iii) In sales dollars.
(c) Draw a detailed break-even chart.
(d) For each of the following independent situations, determine the break-even point as a percent of capacity:
(i) Fixed costs are reduced to$2688;
(ii) Fixed costs increase to $4588 and variable costs are reduced to 80% of the selling price;
(iii) The selling price is reduced to $171.