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What is the revised contribution margin per unit

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Reference no: EM132467299

Data concerning the Wilson Company's single product appear below:

                                    Per Unit                Percentage of Sales

Selling price                 $190                     100 %

Variable expenses           76                      40 %

Contribution margin         114                       60%

  • Fixed expenses are $522,000 per month. The company is currently selling 6,000 units per month.
  • The marketing manager would like to cut the selling price by $19 and increase the advertising budget by $30,900 per month. The marketing manager predicts that these two changes would increase monthly sales by 1,600 units.

Required:

Question (a) What is the revised contribution margin per unit?

Question (b) What is the new monthly sales units?

Question (c) What should be the overall effect on the company's monthly net operating income of this change?

Question (d) Calculate the break-even point of the business in units (to the nearest unit)

(i) before the change and

(ii) in the new situation with the changes suggested by the marketing manager.

Question (e) Calculate the margin of safety of the business in units (to the nearest unit)

(i) beforethechangeand

(ii) in the new situation with the changes suggested by the marketing manager.

Reference no: EM132467299

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