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Compute the break-even point in units and dollars

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Reference no: EM13889117

Queensland Company reports the following operating results for the month of April.

Management is considering the following course of action to increase net income: Reduce the selling price by 4%, with no changes to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 20%.

Queensland Company CVP Income Statement

For the Month Ended April 30, 2014

 

Total

Per Unit

Sales (9,000 units)

$450,000

$50

Variable costs

270,000

30

Contribution margin

180,000

$20

Fixed expenses

150,000

Net income

$  30,000

Using the contribution margin technique, compute the break-even point in units and dollars and margin of safety in dollars:

(a) Assuming no changes to selling price or costs, and

(b) Assuming changes to sales price and volume as described above. Comment on your findings.

Reference no: EM13889117

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