XYZ Inc. produces a machine that washes and dries your laundry in a single, compact unit that doesn't require existing washer/dryer hookups or venting. The machine is popular with RV & boat owners and with urban dwellers who live in small condos or apartments. Research has determined that demand for this product is elastic meaning that a small percentage change in price will result in a larger percentage change in demand. XYZ Inc. is considering lowering its price to increase revenue through increased sales volume. Given the information in the table below, what level of sales would be necessary for XYZ to break even on the proposed price reduction? In other words, how much would sales need to increase to maintain the total contribution that XYZ realized at the higher price? Current Total Sales S 3600000 Current Contribution Margin % 20 Current Unit Price $ 1600 Proposed Price Reduction % 10 Part 2 At the reduced price, the contribution margin would be enter your response here %. (Round to one decimal place.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
XYZ Inc. produces a machine that washes and dries your laundry in a single, compact unit that doesn't require existing washer/dryer hookups or venting. The machine is
popular with RV & boat owners and with urban dwellers who live in small condos or apartments. Research has determined that demand for this product is elastic meaning
that a small percentage change in price will result in a larger percentage change in demand. XYZ Inc. is considering lowering its price to increase revenue through increased
sales volume. Given the information in the table below, what level of sales would be necessary for XYZ to break even on the proposed price reduction? In other words, how
much would sales need to increase to maintain the total contribution that XYZ realized at the higher price? Current Total Sales $ 3600000 Current Contribution Margin % 20
Current Unit Price $ 1600 Proposed Price Reduction % 10 Part 2 At the reduced price, the contribution margin would be enter your response here %. (Round to one
decimal place.)
Transcribed Image Text:XYZ Inc. produces a machine that washes and dries your laundry in a single, compact unit that doesn't require existing washer/dryer hookups or venting. The machine is popular with RV & boat owners and with urban dwellers who live in small condos or apartments. Research has determined that demand for this product is elastic meaning that a small percentage change in price will result in a larger percentage change in demand. XYZ Inc. is considering lowering its price to increase revenue through increased sales volume. Given the information in the table below, what level of sales would be necessary for XYZ to break even on the proposed price reduction? In other words, how much would sales need to increase to maintain the total contribution that XYZ realized at the higher price? Current Total Sales $ 3600000 Current Contribution Margin % 20 Current Unit Price $ 1600 Proposed Price Reduction % 10 Part 2 At the reduced price, the contribution margin would be enter your response here %. (Round to one decimal place.)
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Cost estimation
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education