What dollar volume of sales per month is required for albert

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Problem A) Albert Inc, a sole proprietorship, sells only one product. The regular price is $275. Variable costs are 60% of this selling price, and fixed costs are $35,500 a month. Management decides to decrease the selling price from $275 to $250 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 $275 a unit, what is the contribution margin ratio?

(b) ?At the original selling price of $275 a unit, what dollar volume of sales per month is required for Albert Inc to break-even?

(c) At the original selling price of $275 a unit, what dollar volume of sales per month is required for Albert Inc to earn a monthly operating income of $20,750?

(d) At the reduced selling price of $250 a unit, what is the contribution margin ratio?

(e) At the reduced selling price of $250 a unit, what dollar volume of sales per month is required to break-even?

Problem B)
Explain the significance of Contribution Analysis for an Organization with special reference to the example above.

Reference no: EM132965320

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