Solution 1:
Contribution margin per unit = Selling price per unit - Variable cost per unit = $24 - ($12 + $2) = $10 per unit
Fixed costs = $460,000
Breakeven point = Fixed costs / CM per unit = $460,000 / $10 = 46000 disks
Solution 2:
New sales volume = 210000*120% = 252000 disks
Company's net income if 20% increase in Sales volume = (252000*$10) - $460,000 = $2,060,000]
Solution 3:
New variable cost per unit = $12*130% + $2 = $17.60 per unit
New contribution margin per unit = $24 - $17.60 = $6.40 per unit
CM ratio = $6.40 /$24 = 26.666666%
Required sales volume to earn desired income = (Fixed costs + Target profit) / CM ratio
= ($460,000 + $1,640,000) / 26.666666% = $7,875,000
solution 4:
current CM ratio = $10 / $24 = 41.666666%
Current variable cost ratio = 100% - 41.6666666 = 58.3333333%
New variable cost per unit = $17.60
Target selling price to maintain current CM ratio = $17.60 / 58.33333333% = $30.17 per unit
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