In 2013, Manhoff Company had a break-even point of $350,000 based on a selling price of $5 per unit and fixed costs of $112,000. In 2014, the selling price and the variable costs per unit did not change, but the break-even point increased to $420,000.
Instructions
(a) Compute the variable costs per unit and the contribution margin ratio for 2013.
(b) Compute the increase in fixed costs for 2014.