Whitewater Inc sells a product that has variable costs of $40 and a selling price of $95. Its current sales total $304,000 per month. Fixed manufacturing costs total $40,000 per month and fixed selling and administrative costs total $35,000 per month. The company is considering a proposal that will increase the selling price by 10%, increase the fixed manufacturing costs by 10%, and increase the fixed selling and administrative costs by $1,500. Part 1: Compute the company's current break-even point in units. Part 2: Compute the company's current income and the current margin of safety. Part 3: Compute the new contribution margin per unit assuming the proposal is accepted.
Whitewater Inc sells a product that has variable costs of $40 and a selling price of $95. Its current sales total $304,000 per month. Fixed
Part 1:
Compute the company's current break-even point in units.
Part 2:
Compute the company's current income and the current margin of safety.
Part 3:
Compute the new contribution margin per unit assuming the proposal is accepted.
Part 4:
Compute the new break-even point in units assuming the proposal is accepted.
Part 5:
Compute the company's income assuming the proposal is accepted and sales total 3,300 units.
Part 6:
Should the proposal be accepted?
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