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What is the contribution margin per unit

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Reference no: EM132418466

Problem: XYZ Company is a retailer of widgets. XYZ pays $4.75 for each widget and sells them for $8.00. Monthly fixed costs are $26,000. The widget cost is the only variable cost.

Required:

Question 1: What is the contribution margin per unit?

Question 2: What is the break-even point in units?

Question 3: How many units will XYZ need to sell to earn target profit of $13,000?

Question 4: How much would net income increase if XYZ Company sold 100 more units?

Question 5: If the fixed costs increased, what would be the effect on the break-even point?

Reference no: EM132418466

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