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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
6-2Â
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Queensland Company reports the following operating results for the month of April.
Queensland Company CVP Income Statement
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For the Month Ended April 30, 2014
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Total |
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Per Unit |
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Sales (9,000 units) |
$450,000 |
 |
$50 |
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Variable costs |
270,000 |
 |
30 |
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Contribution margin |
180,000 |
 |
$20 |
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Fixed expenses |
150,000 |
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 |
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Net income |
$Â 30,000 |
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Management is considering the following course of action to increase net income: Reduce the selling price by 4%, with no changes to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 20%.
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Using the contribution margin technique, compute the break-even point in units and dollars and margin of safety in dollars:
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(a)Â Â Assuming no changes to selling price or costs, and
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(b)Â Â Assuming changes to sales price and volume as described above. Comment on your findings.
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