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What is the break even unit in units for Flounder Company

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Reference no: EM132903759

Question - The following is the contribution income statement for Flounder Company Limited for the year ended March 31, 2021:

Sales $875,000

Variable expenses 525,000

Contribution margin 350,000

Fixed expenses 300,000

Operating income $50,000

The company has no beginning or ending inventories and produced and sold 43,750 units during the year.

Required -

a. What is the company's contribution margin ratio?

b. What is the break even unit in units for Flounder Company?

c. How many units flounder company would have to sell to attain an operating income of 100,000?

d. The manager of Flounder Company, Triton, has just found out that due to an increased supplier cost the variable cost will increase by $2.00 per unit. They feel that if they increase their advertising by $10,000 they will be able to sell 25% more units and will be able to make a higher operating income without having to increase their price to compensate for the higher variable cost. Is Triton's assessment correct or incorrect? Explain.

Reference no: EM132903759

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