Question

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 (10,000 units) $500,000 $50 Variable costs 250,000 25.00 Contribution margin 250,000 $25.00 Fixed expenses 187,425 Net income $62,575 Management is considering the following course of action to increase net income: Reduce the selling price by 5%, with no changes to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 10%. 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 $ Click if you would like to Show Work for this question: Open Show Work

Answer 1

Answer FIxed cost Break even point in (a) unts Contrbution maain pen unit $ 187,५२ 1 Vanable cost Per unit selling pnce pen unit-- (8न/५२5 $50-$25 $ 18 ने५२ as Break even uu F497 unty selling ente Pen anit Brealceven point in dollas 1 3t4,850

ALtual salep- Break even selthg prtce per un margin of safety in dollas cales (t0000-14) x5D

(b selling pice reducec by S. 50- 5 selling prile per unit Sth lo 9000 -+10' Lrul saley 'ncveases l0,000+ lo0o llooo unuh nit sale cellng pnce porunt- vasna ble cosb CoMibution mongm rer uni punit $47.5-$as १२३.४ rer uni

FIxed cost Breat even pont in unts Contribution maim per un 18425 $ २२० &zto unb 8330 Breal even point in dollas čaex $u5 8230 argin ot safety in dollas Actual sales- Breat even selling pne ealej pen unit 8330 looo ক lab,85