Queensland Company reports the following operating results for the month of April.
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QUEENSLAND COMPANY
CVP Income Statement
For the Month Ended April 30, 2014
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Total
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Per Unit
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| Sales (8,500 units) |
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$459,000 |
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$54.00 |
| Variable costs |
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243,270 |
|
28.62 |
| Contribution margin |
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215,730 |
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$25.38 |
| Fixed expenses |
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157,356 |
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| Net income |
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$58,374 |
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Management is considering the following course of action to increase net income: Reduce the selling price by 5%, with no changes to unit variable costs or fixed costs. Management is confident that this change will increase unit sales by 10%.
Using the contribution margin technique, compute the break-even point in units and dollars and margin of safety in dollars: (Round intermediate calculations to 4 decimal places e.g. 0.2522 and final answer to 0 decimal places, e.g. 2,510.)
(a) Assuming no changes to selling price or costs.
| Break-even point |
|
|
units |
| Break-even point |
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$
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|
| Margin of safety |
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$
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(b) Assuming changes to sales price and volume as described above.
| Break-even point |
|
|
units |
| Break-even point |
|
$
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|
| Margin of safety |
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$
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