Problem 1: Webber, Inc. developed the following information for its product:
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Per Unit
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Sales price
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$90
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Variable cost
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54
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Contribution margin
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$36
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Total Fixed Costs
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$1,260,000
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Instruction:
Answer the following independent questions and show computations using the contribution margin technique to support your answer.
1. How many units are sold to break even?
2. What is the total sale that must be generated for the company to earn a profit of $60,000?
3. If the company is presently selling 45,000 units, but plans to spend an additional $90,000 on an advertising program, how many additional units must the company sell to earn the same net income it is now making?
4. Using the original data in the problem, compute a new breakeven point in units if the unit sales price is increased 10%, unit variable cost is increased by 5%, and total fixed costs are increased by $220,500.