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   270,000   30.00 Contribution margin   180,000   $20.00 Fixed expenses   150,000     Net income   $30,000     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: (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     ?     units Break-even point   $ ? Margin of safety   $ ? (b1) Assuming changes to sales price and volume as described above. Break-even point      units Break-even point   $ ? Margin of safety

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 5PB: Wellington, Inc., reports the following contribution margin income statement for the month of May....
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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   270,000   30.00
Contribution margin   180,000   $20.00
Fixed expenses   150,000    
Net income   $30,000    


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: (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  

 

?     units
Break-even point  

$

?
Margin of safety  

$

?


(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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