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Find the new contribution margin ratio and new net income

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Question - Company A is thinking of mass-producing one of its products. To do so would increase variable costs for all products by an average of $0.70 per unit. The company also estimates that this change could increase the overall number of products sold by 10%, and the average sales price would increase $0.20 per unit. Company A currently sells 491,740 units at an average selling price of $26.50. The manufacturing costs are $6,863,512 variable and $2,050,140 fixed. Selling and administrative costs are $2,651,657 variable and $794,950 fixed.

Find the New Contribution Margin Ratio and New Net Income?

If the average sales price per unit did not increase when the company began mass-producing the special-order, what would be the effect on the Contribution Margin Ratio and the Profit?

Reference no: EM132158656

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