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?
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?
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
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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.
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