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