Question: Volodya Company reported the following data regarding the product it sells:
Sales price Contribution margin ratio Fixed costs $20 40% $900,000
Required: Use the contribution margin ratio approach and consider each requirement separately.
What is the break-even point in dollars? In units?
To obtain a profit of $360,000, what must the sales be in dollars? In units?
If the sales price increases to $24 and variable costs do not change, what is the new break-even point in dollars? In units?
Sales price Contribution margin ratio Fixed costs $20 40% $900,000