Victoria Company reports the following operating results for the month of April.

Management is considering the following course of action to increase net income: Reduce the selling price by 4%, 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:
(a) Assuming no changes to selling price or costs,
(b) Assuming changes to sales price and volume as described above.
Comment on your findings.

Transcribed Image Text:

VICTORIA COMPANY CVP Income Statement For the Month Ended April 30, 2017 Sales (9,000 units) Variable costs Contribution margin Fixed expenses Net income Total $450,000 270,000 180,000 150,000 S 30,000 Per Unit $50 30 $20