SOLUTION:
Variable Cost per unit = $25.62
Total Fixed cost = $363,000
(5) Break-even
sales in Units :
Selling price will be = $45 per lamp
Variable Cost deceased by $3 = 25.62-3= $22.62 per
lamp
Fixed Cost will be same = $363,000
=(Fixed cost/Contribution per unit)
=[(Fixed cost)/(Selling price - Variable
cost)]
=[(363000)/(45-22.62)]
=[(363000)/22.38] = 16,219.83
=16,220 lamps
(6) Break-even
sales in Units :
New Selling price will be = $48 per
lamp
Variable Cost will be same = $25.62 per
lamp
Fixed Cost will be same = $363,000
=[(363000)/(48-25.62)]
=[(363000)/22.38] = 16,219.83
= 16,220 lamps
(7) Break-even
sales in Units :
New Selling price will be = $42 per lamp
Variable Cost will be same = $25.62 per
lamp
Fixed Cost will be same = $363,000
=[(363000)/(42-25.62)]
=[(363000)/16.38] = 22,161.17
=22,161 lamps
(1) Projected Contribution Margin and Contribution Margin Ratio :
Selling price will be = $45 per lamp
Variable Cost will be = $25.62 per
lamp
Fixed Cost will be = $363,000
*Contribution Margin = Selling price per unit- Variable cost per
unit
=45-25.62 = $19.38 per unit
*Contribution Margin Ratio :
=Contribution /Sales
=19.38/45 = 0.4307 = 43.07%
(2) Break-even sales in Units & to earn a Desired Profit (DP) of $190,000:
*Units for desired profit = (Fixed cost + Desired Profit) /Contribution per unit
Selling price will be = $45 per lamp
Variable Cost will be = $25.62 per
lamp
Fixed Cost will be = $363,000
Desired Net income is = $190,000
Contribution per unit = Selling price per unit- Variable cost
per unit
=45-25.62 = $19.38 per unit
= (Fixed cost + Desired Profit) /Contribution per unit
=(363,000+190,000)/19.38
=553,000/19.38 = 28,534.57
= 28,534 lamps
(3)
Break-even sales in Units :
Selling price will be same= $45 per lamp
Variable Cost will be same = $25.62 per
lamp
Fixed Cost will increase by $30,000= 363,000+30,000
=$393,000
=[(393000)/(45-25.62)]
=[(393000)/19.38] =20,278.63
=20,279 lamps
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