Homework Answers
Contribution margin=Sales-Variable expenses
=(48-23)=$25 per unit
Current Breakeven=Fixed expenses/Contribution margin
=(980,000/25)=39200 units
New fixed expenses=(980,000*1.1)=$1,078,000
Hence contribution margin required=(1,078,000/39200)=$27.5 per unit
Hence required sales price=(27.5+23)=$50.5 per unit
Hence increase in price=(New price-Previous price)/Previous sales price
=(50.5-48)/48
=5.2%(Approx).
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