Hart Company sold 5,000 units for a price of $50 per unit and had the following information: Variable expenses$160,000 Fixed expenses$125,000 Breakeven sales point $347,222 If the sales price per unit were to increase by 10%, variable expenses were to increase by 12.5%, and fixed expenses were to increase by 20%, what would be the new contribution margin per unit?

Answered: Hart Company sold 5,000 units for a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Hart Company sold 5,000 units for a price of $50 per unit and had the following information:


Variable expenses	$	160,000
Fixed expenses	$	125,000
Breakeven sales point	$	347,222

If the sales price per unit were to increase by 10%, variable expenses were to increase by 12.5%, and fixed expenses were to increase by 20%, what would be the new contribution margin per unit?

Expert Solution

Step 1

Introduction:

The term "contribution margin" can be applied to any aspect of a business, including individual products, product lines, profit centers, subsidiaries, distribution channels, sales per client, and the whole firm. Below, we offer several examples of how it may be applied to enhance a company's financial situation.