Question:
In 2010, Hadicke Company had a break-even point of $350,000 based on a selling price of $7 per unit and fixed costs of $105,000. In 2011, the selling price and the variable cost per unit did not change, but the break-even point increased to $420,000.
Instructions
(a) Compute the variable cost per unit and the contribution margin ratio for 2010.
(b) Compute the increase in fixed costs for 2011.