Question:
Scott Confectionary sells its Stack-o-Choc candy bar for $0.80. The variable cost per unit for the candy bar is $0.45; total fixed costs are $175,000.
Required
1. What is the contribution margin per unit for the Stack-o-Choc candy bar?
2. What is the contribution margin ratio for the Stack-o-Choc candy bar?
3. What is the breakeven point in units? In sales dollars?
4. If an increase in chocolate prices causes the variable cost per unit to increase to $0.55, what will happen to the breakeven point?