Reference no: EM133010220
Question - Assignment - Accounting for Managerial Decisions - Disano Company, a sole proprietorship, sells only one product. The regular price is $160. Variable costs are 55% of this selling price, and fixed costs are $8,400 a month.
Management decides to decrease the selling price from $160 to $145 per unit. Assume that the cost of the product and the fixed operating expenses are not changed by this pricing decision.
(a) At the original selling price of $160 a unit, what is the contribution margin ratio?
(b) At the original selling price of $160 a unit, what dollar volume of sales per month is required for Diana Company to break-even?
(c) At the original selling price of $160 a unit, what dollar volume of sales per month is required for Diana Company to earn a monthly operating income of $6,500?
(d) At the reduced selling price of $145 a unit, what is the contribution margin ratio?
(e) At the reduced selling price of $145 a unit, what dollar volume of sales per month is required to break-even?
(f) Show the break-even point by extracting relevant information from the case in MS Excel.
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