Reference no: EM13142981
Rush Company developed the following information for its product:
Sales price=$90 per unit,Variable cost=54 per unit, Contribution margin= $36 per unit, Total fixed costs=$1,080,000.
Instructions:
Answer the following independent questions and show computations using the contribution margin technique to support the answer.
1-How many units must be sold to break even?
2-What is the total sales that must be generated for the company to earn a profit of $60,000?
3-If the company is presently selling 45,000 units, but plans to spend an additional $108,000 on an advertising program, how many additional units must the company sell to earn the same net income it is now making?
4-Using the original data in the problem, compute a new break-even point in units if the unit sales price is increased 20%, unit variable cost is increased by 10%, and total fixed costs are increased by $135,000.
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