Reference no: EM132740725

Question - Corporation has experienced volatile sales of it's product and suffered a loss this month. Corporation sold 16,000 units for the month and has the following income statement:

Sales $480,000

Variable expenses (336,000)

Fixed expenses (180,000)

Net loss $(36,000)

Required -

1. Compute Corporation's contribution margin ratio.

2. Compute the break-even point for Corporation in units.

3. Compute the break-even point for Corporation in Sales Revenue ($).

4. Assume for this part of the question only that the president of Corporation believes a 10% decrease in the sales price and a $10,000 increase in the advertising costs will double the volume of sales next month.

If this is correct,

1. What will be the contribution margin per unit next month?

2. What will Corporation report as the net income or loss next month?